According to the docket, the Settlement Fairness Hearing was held on January 17, 2003, before U.S. District Judge James D. Whittemore. On February 6, 2003, the Court entered the Order and Final Judgment, approving the settlement, and the case was closed.
As reported by the Company’s Form 10-Q for the quarterly period ended June 30, 2002, the Company entered into a memorandum of understanding to settle the consolidated securities class action lawsuit that is currently pending against Pinnacle, its Chief Executive Officer, its former Chief Financial Officer, its former Chief Executive Officer, various current and former directors of Pinnacle, Pinnacle's former accountants, PricewaterhouseCoopers, LLP, and the underwriters of Pinnacle's January 18, 2000 secondary offering. The litigation related to alleged misrepresentations contained in a prospectus for Pinnacle's January 18, 2000 secondary stock offering and alleged misleading statements contained in press releases and other filings with the SEC relating to certain of Pinnacle's financial statements, the acquisition of approximately 1,858 communications sites from Motorola, Inc., Pinnacle's relationship with its former accountants and other matters. The settlement, which has been agreed to by all of the parties to the litigation, provides that the claims against Pinnacle and its current and former officers and directors will be dismissed. In agreeing to the proposed settlement,
Pinnacle and its current and former officers and directors specifically deny any wrongdoing.
The settlement provides for a cash payment of approximately $8.2 million, all of which will be paid directly by Pinnacle's insurance. Of the $8.2 million payment, $4.1 million shall be deemed to have been made on behalf of Pinnacle, and $4.1 million shall be deemed to have been made on behalf of the individual defendants. In addition, the settlement provides for additional cash payments of approximately $2.6 million by PricewaterhouseCoopers and $200,000 by the underwriter defendants. The settlement is subject to certain customary conditions, including preliminary and final approval by the Bankruptcy Court, the U.S. federal district court in which the action is pending and notice to the class. Once the courts give preliminary approval to this settlement, formal notices with the details of the settlement will be sent to the purported class members who purchased Pinnacle common stock during the period of June 29, 1999 to August 14, 2001.
The original class action lawsuit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 18, 2000 and March 17, 2001, thereby artificially inflating the price of Pinnacle securities. The Complaint alleges that throughout the Class Period, the Company repeatedly issued press releases highlighting the Company's increasing financial strength through its numerous acquisitions of wireless tower sites and its financial results. In August 2000, as alleged in the Complaint, Pinnacle revealed that the Securities and Exchange Commission ("SEC") was investigating the independence of its accounting firm, PriceWaterhouse Coopers, and also revealed that the SEC was investigating the Company's accounting for certain aspects of its recent acquisition of certain assets from Motorola, Inc. The Company, however, stated that its publicly issued financial statements were, at all times, prepared in complete conformity with generally accepted accounting principles. The Company further stated that the SEC investigation was nothing more than a "political" issue to further the SEC's new provision dealing with accountant independence. Then on March 17, 2001, Pinnacle issued a press release which shocked investors by announcing that the Company's previously issued financial statements for the fiscal year ended December 31, 1999 and its quarterly reports for the three months ended September 30, 1999, March 31, 2000, June 30, 2000 and September 30, 2000 would have to be revised. Defendants also disclosed that the restatements would be necessary to properly account for the Motorola acquisition. On March 19, 2001, Pinnacle stock traded at slightly below $9 per share, an 88% decline from its Class Period high of $75.