According to the latest docket posted, on December 19, 2005, the Court entered the Order preliminarily approving the settlement and scheduling the final approval hearing for March 21, 2006. According to the Stipulation of Settlement, the settlement fund was reduced to $15 million. The settlement hearing was held, and on March 27, 2006, the Court entered Judgment.
In an article in the New York Law Journal dated November 28, 2003, on May 29, 2001 the parties to this litigation entered into a Memorandum of Understanding ('MOU') outlining the general terms of a proposed settlement of $17.4 million. On the same day, Reliance, on behalf of itself and the individual defendants, entered into an agreement ('the funding agreement') with Syndicate 1212 of Lloyd's, London and the other underwriters referred to above, in which the underwriters agreed to fund the proposed settlement, consistent with their insurance obligations. The court granted a motion to join Syndicate 1212 at Lloyd's, London and other underwriters ('the underwriters') as defendants in this action for the purpose of enforcing a Memorandum of Understanding executed by plaintiffs and defendants.
Further, the article stated that on June 12, 2001 Reliance filed a bankruptcy petition under Chapter 11 in the United States District Court for the Southern District of New York, thus staying the class action as against Reliance pursuant to 11 U.S.C. §362(a). That action is pending before Bankruptcy Judge Gonzalez.
According to a the complaint, During the Class Period, defendants issued a series of public statements touting the Company's growth and profitability. After numerous repeated public announcements emphasizing the Company's success, Reliance stock traded at over $10 per share in June of 1999. On May 10, 2000, Reliance took investors by surprise, announcing that the company's financial results for the first quarter of fiscal 2000 were even worse than investors had been led to believe. For the quarter, Reliance announced that it would be reporting an operating loss of $36.5 million, or $.31 per diluted share, for the first quarter. In response, Reliance stock fell steadily, from $2.625 on May 10, 2000, to its trading price of slightly over $ 1 per share on June 19, 2000 - - a far cry from its Class Period high of over $11 per share. Throughout the Class Period, Defendants made a series of false and misleading statements regarding the financial success and record growth of Reliance, which statements caused Reliance's stock price to be artificially inflated. Those statements appeared in public filings with the SEC and in Reliance press releases.