According to a press release dated June 8, 2005, the court has approved the settlement of class action claims brought against Deutsche Telekom AG (“DT”), its former CEO and several of its underwriters for $120 million in cash. The settlement covers claims brought on behalf of all purchasers of DT shares in the form of American Depositary Shares (ADSs) from June 19, 2000 through February 21, 2001 (the “Class”). The Class includes the purchasers of ADSs in DT's June 2000 public offering, and all purchasers of ADSs in the secondary market during the following eight month period. The settlement represents among the largest class action recoveries for aggrieved securities holders.
In a press release dated January 29, 2005, Deutsche Telekom AG (DT) Saturday said that it has, expressly without conceding any wrongdoing, entered into a stipulation to settle all claims that have been asserted against it in the US securities class action litigation pending in the US District Court for the Southern District of New York, including all pending shareholder claims related to DT's public share offering in June 2000.
Pursuant to the agreement, which requires approval by the US court, DT will pay US$120 million - about EUR92.2 million. DT expects a significant portion of this amount to be covered under existing D&O insurance policies.
The original action alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and alleges that the Registration and Prospectus contained material misrepresentations and/or omissions. Defendants were issuers of, sellers of or underwriters of the sale of ADSs sold pursuant to the Registration and Prospectus. The complaint alleges that the Registration and Prospects were materially false and/or misleading because they failed to disclose material facts that were required to be disclosed. These material facts were, among others that (a) by the effective date of the offering on June 17, 2000, the Company was in the very advanced stages of merger negotiations with VoiceStream, a telecommunications start up company with just 2.3 million subscribers and (b) during the year 2000, up until the effective date of the stock offering, Deutsche Telekom's profits had been significantly negatively impacted by increasing costs incurred in competing for mobile phone customers. The complaint alleges that on or about July 24, 2000, Deutsche Telekom publicly announced its planned $50.7 billion takeover of VoiceStream. On news of the announcement, the Company's shares declined almost seven points to $44 3/4 per share. On July 28, 2000, Deutsche Telekom announced a 26 percent fall in profits for the first half of the year and attributed the decline, in part, to the cost of competing for mobile phone customers.