By the Amended Final Order and Judgment dated September 6, 2000, the court approved the settlement and dismissed the case.
According to the Notice Of Pendency And Proposed Settlement dated June 19, 2000, a settlement fund in the amount of $5,450,000 (the “Settlement Fund”) has been established. The Settlement Fund, less Court-approved costs for notice and administration, is being held in escrow and is currently earning interest. Plaintiffs estimate that there were approximately 128,000,000 shares of Ascend Communications, Inc. (“Ascend”) securities purchased and/or acquired during the period of November 5, 1996, through September 30, 1997, inclusive (the “Settlement Class Period”), which were allegedly damaged as a result of the purported acts or omissions described below. Plaintiffs estimate that the average recovery per damaged share of Ascend securities under the settlement will be $.0425 per share before the deduction of attorneys’ fees, costs and expenses, as approved by the Court. Depending on the number of claims filed, when the shares were purchased during the Settlement Class Period, and whether those shares were held at the end of the Settlement Class Period, if sold, when they were sold, and the amounts awarded by the Court for attorneys’ fees, costs and expenses, an individual Settlement Class Member may receive more or less than this average amount.
Prior to the Proposed Settlement, defendants filed a motion to dismiss a consolidated second amended complaint pursuant to the Private Securities Litigation Reform Act of 1995, Fed. R. Civ. P. 12(b)(6), and Fed. R. Civ. P. 9(b). Plaintiffs filed a motion to strike. The court granted without prejudice defendants' motion to dismiss a second amended complaint under the Private Securities Litigation Reform Act of 1995, and the court denied all of plaintiffs' motions. The court did not consider evidence outside the pleadings in reaching its decision with respect to defendants' motion.
The original Complaint charges defendants with violating federal securities and state laws, including Section 10(b) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933, by engaging in an illegal scheme and deceptive course of conduct designed to inflate Ascend's stock price through positive statements concerning Ascend's business, earnings and its growth prospects, despite the fact that, at the time the statements were made, defendants knew, or recklessly disregarded, but failed to disclose to investors, that sales of Ascend's advanced modem products would all but cease because of, among other things, serious software and firmware problems. The defendants' scheme allowed Ascend's officers and directors to sell their Ascend shares at enormous gains, exceeding $40 million in proceeds.