By the Order and Final Judgment entered on May 28, 2003, the settlement set forth in the Settlement Agreement is approved, and the complaint is dismissed with prejudice and without costs.
By the Notice of Proposed Settlement of Class Action Against Anicom Director and Officer Defendants, and Hearing on Proposed Settlement and Attorneys' Fee Petition, a second proposed settlement has been reached in this case. The first settlement - already approved by the federal district court in Chicago - was with PricewaterhouseCoopers ("PwC"), the former Anicom independent auditors. This second proposed settlement is with four former officers and directors of the now-bankrupt Anicom Inc. - former board chairman, former CEO, former CFO, and former COO. Together with the previous PwC settlement, this second proposed settlement would provide a gross recovery of between $11 million and $11.5 million to members of the overall Anicom Shareholder Class (those who purchased shares of Anicom common stock on the open market between April 29, 1998 and July 18, 2000, inclusive). This second proposed settlement alone would provide an immediate gross recovery to the Anicom Shareholder Class of $5,263,750, with the possibility of an increase up to $5,763,750.
PwC settled with the PwC Shareholder Class (defined as persons who purchased common stock of Anicom over the open market between February 17, 1999 and July 18, 2000, inclusive). After notice to PwC Shareholder Class members, the PwC Settlement was approved by this Court in an Order and Final Judgment on November 26, 2002 . This settlement resulted in a recovery of approximately $5,750,000 to the members of the PwC Shareholder Class.
On July 13, 2001, Lead Plaintiff SWIB filed its First Amended Consolidated Class Action Complaint, amending the claims previously filed in federal district court, to allege that PwC, Anicom's auditor during the class period, also participated in the fraud alleged against Anicom and the Individual Defendants. PwC filed a motion to dismiss these claims, which was denied on November 20, 2001. On March 26, 2002, over PwC's objections, the Court granted SWIB's motion for class certification, certifying a plaintiff class against PwC.
On January 5, 2001, Anicom filed a voluntary petition of relief under Chapter 11 § 101 (the "Bankruptcy Code"), which is currently pending before Judge Susan Pierson Sonderby, in the United States Bankruptcy Court for the Northern District of Illinois ("Bankruptcy Court"). The Joint Recovery Agreement was approved by the Bankruptcy Court and later approved by the District Court, after notice to class members in the Securities Shareholder Class Action and approval hearing, pursuant to Rule 23 of the Federal Rules of Civil Procedure and the PSLRA.
Similar cases were consolidated before United States District Judge John W. Darrah. Consistent with the requirements of Rule 23 and the PSLRA, SWIB, a member of the purported class, filed a motion seeking to be selected as Lead Plaintiff of the Shareholder Class, and the Court, having determined that SWIB was the class member "most capable of adequately representing the interests of class members," appointed SWIB as Lead Plaintiff and approved SWIB's selection of Susman Godfrey, L.L.P., as Lead Counsel, with assistance from Foley & Lardner and Keller Rohrback, L.L.P. A Consolidated Complaint was filed December 18, 2000.
The original Complaint charges that Anicom and its executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by issuing a series of false and misleading statements during the Class Period that materially overstated Anicom's revenues, income and earnings growth. These statements were materially false and misleading since they were attributable to improper accounting practices which resulted in overstatement of net assets in violation of Generally Accepted Accounting Principles ("GAAP"). As a result of Anicom's materially false and misleading statements, the market price of the Company's common stock was artificially inflated during the Class Period. On July 18, 2000, Anicom revealed to the market that it was investigating possible "accounting irregularities" which could result in a revision of its 1998 and 1999 financial statements. It is currently believed that the total effect of these accounting revisions and charges could be as much as $35 million. Thereafter, Anicom's President and Chief Financial Officer took administrative leave pending completion of the Company's investigation. Following the announcement, trading in Anicom common stock was halted and has not yet resumed.