According to co-lead counsel's website, after arms-length negotiations, Lead Plaintiffs and collectively with the Director Defendants agreed to settle the claims against the Director Defendants. Pursuant to the terms of the Director Settlement, a Settlement Fund in the amount of $5,270,000 will be created for the benefit of the Class. On March 2, 2005, Lead Plaintiffs and Defendant FLV entered into a Stipulation and Agreement of Settlement (the “FLV Stipulation”) to settle the claims asserted against FLV. Pursuant to the terms of FLV proposed settlement, as set forth more fully in the FLV Stipulation, a Settlement Fund in the amount of $250,000 will be created for the benefit of the Class. In March 2005, the Court issued Orders preliminarily approving the Directors and FLV Settlements. A Fairness Hearing to determine, among other things, whether the proposed settlements with the Directors and FLV are fair, reasonable and adequate was held May 24, 2005. On July 18, 2005, Judge Patti B. Saris signed a Final Judgment approving the Settlements and the Plan of Allocation and awarding Plaintiffs’ Counsel attorneys’ fees and reimbursement of expenses.
On October 7, 2004, accounting firms KPMG Bedrijfsrevisoren of Belgium ("KPMG Belgium") and KPMG LLP of the United States (together the "KPMG Defendants") agreed to pay a total of $115 million to settle the claims against them stemming from the collapse of L&H. The payment by the KPMG Defendants represents one of the largest combined recoveries from accounting firms in a securities class action. On October 14, 2004, the Court issued an order granting Preliminary Approval of this partial settlement with the KPMG Defendants; certifying the action "as a class action on behalf of all persons or entities who purchased the common stock of L&H on the NASDAQ Stock Market or who purchased L&H call options or sold L&H put options on any United States-based options exchange between April 28, 1999 and November 9, 2000, inclusive"; and setting a Settlement Fairness Hearing, to determine among other things, whether this proposed partial settlement is fair, reasonable and adequate, whether the Plan of Allocation for the proceeds of the Settlement is fair and reasonable and to consider Plaintiffs' Counsel's application for attorneys' fees and reimbursement of expenses, for December 20, 2004. On December 20, 2004, the Settlement Fairness Hearing was held and on December 22, 2004, Judge Saris signed an Order and Final Judgment approving the Settlement and the Plan of Allocation and awarding Plaintiffs’ Counsel attorneys’ fees.
During 2002, Lead Plaintiffs successfully defeated several motions to dismiss filed by the Defendants. The case then proceeded into the discovery phase of the litigation.
On September 21, 2001, Lead Plaintiffs filed their First Consolidated and Amended Complaint (the "Complaint") against certain officers and directors of L&H, KPMG and other defendants involved in the securities fraud at the Company. Lead Plaintiffs also expanded their Class Period to include all investors who purchased L&H common stock or call options or sold L&H put options from April 28, 1998 through and including November 8, 2000. The Company was not named as a Defendant in the Complaint due to its November 2000 bankruptcy filing.
In January 2001, the Court appointed three shareholders as Lead Plaintiffs and appointed Lead Counsel.
The original complaints allege that the Company’s statements regarding its business and financial results were materially misleading because they included overstated and/or fictitious sales in Korea. After the truth about the Korean sales was revealed, the price of L&H’s shares fell as low as $26-3/4 per share.
Additional actions were also brought against the Company in the Eastern District of Pennsylvania. In response to a motion brought by Defendants, the Pennsylvania actions have been transferred to the District of Massachusetts.
