According to MTI Technology Corp.'s SEC Form 10-Q filing for the quarterly period ended July 5, 2003, on October 17, 2002, the parties reached a tentative settlement in principle of this action. On or about December 3, 2002, the parties executed and submitted to the court for preliminary approval their agreement to settle the litigation. On May 19, 2003, the District Court preliminarily approved the settlement. On July 28, 2003, the District Court gave final approval of the settlement, all but $125,000 of which was paid by the Company’s insurers, in return for a release of all claims against the Company and the other defendants, and dismissed the litigation with prejudice.
The action charges that MTI and certain of its officers violated the securities laws by issuing a series of false and misleading statements concerning the Company’s financial condition and business prospects during the Class Period. In particular, the Complaint charges that MTI failed to disclose the implementation of a revised compensation plan which required the Company to pay out more than $3 million in commissions and bonuses during the fourth quarter 2000 causing MTI to report a loss for that quarter. Further, the Company failed to disclose that sales to dot-com companies were waning and that it was unable to collect payments for products sold to dot-com companies, resulting in a substantial earnings shortfall for both the fourth quarter 2000 and the first quarter 2001. As a result of these revelations, MTI's stock collapsed, falling from a Class Period high of $54 3/8 to as low as $4 per share. Moreover, during the Class Period, but prior to the disclosures, MTI executives sold their stock for proceeds of over $24 million. Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired MTI common stock during the Class Period.