On August 28, 2003, U.S. District Judge Roslyn O. Silver issued an Order granting the motion for order authorizing disbursement of settlement fund by plaintiff Bruce Levine. Berdon LLP was paid the sum of $36,549.02 from the Settlement Fund in final payment of its fees and expenses as Settlement Administrator. It was further ordered that any funds remaining one year after the initial distribution be contributed to non-sectarian, not-for-profit. Earlier, on December 13, 2002, the Court entered the Order and Final Judgment by Judge Silver dismissing the action with prejudice. The Stipulation of Settlement and Plan of Allocation were approved as being fair, reasonable and adequate to the Class. In addition, plaintiff’s counsel was awarded attorney's fees in the amount of 25% of the Gross Settlement Fund, and reimbursement of costs and expenses in the amount of $88,099.00, all paid out of the Gross Settlement Fund. Lead plaintiff, Bruce Levine, the Class Representative, was reimbursed $3,700.00 for his reasonable costs and expenses. Before the Stipulation of Settlement was filed on October 9, 2002, Judge Silver issued an Order on September 21, 2000, denying in part and granting in part the motion dismiss plaintiff’s amended complaint by defendants.
The complaint charges defendants with violations of Section 10(b) of Securities and Exchange Act of 1934. Specifically, the complaint alleges on December 28, 1998, SkyMall announced in a press release that the Company’s Internet sales were expected to increase by 600 percent over the previous year. As a result of this announcement, the price per share of SkyMall’s common stock soared from $12 9/16 to $48 5/8, and closed at $35 9/16, in heavy trading. That same day, unbeknownst to the investing public, including plaintiff and the members of the class, SkyMall’s President and CEO, took advantage of the anticipated surge in the value of the Company’s stock by selling 675,000 of his shares of SkyMall common stock at an average price of $35 a share. He then used the proceeds from those sales to exercise options which he held to purchase 2.9 million shares of the Company’s stock at an average price of $7.23 a share.
Further, the complaint alleges on or around December 30, 1998, when it became publicly known that SkyMall’s President and CEO had taken advantage of the expected dramatic rise in the price of SkyMall’s shares caused by the December 28 press release by selling 675,000 of his shares at inflated prices, and then, by exercising his options, increasing his equity stake in the Company from 2.3 million to almost 4.6 million shares, the price of SkyMall’s shares plummeted to $27 3/4 a shares.