According to the lead counsel’s website, there was a partial settlement of $12 million, but the action is continuing against other defendants.
The original complaint alleges that the Winstar made material misrepresentations and omissions of material facts concerning the company's business performance during the relevant time. The complaint also alleges that other defendants, not just the issuer defendant, repeatedly assured investors that the company was performing well, enjoying strong grwoth and well funded to follow its growth-oriented business plan throughout Q1 2002. At the same time, the defendants knew or disregarded that Winstar was overstating revenues and assets. In 04/2001, contrary to prior representations, Winstar announced that it was halting its expansion and laying off thousands of employees. The company delayed the filing of its annual Reports with the SEC and its stock price collapsed.
More specifically, throughout the class period, defendants engaged in a variety of manipulative and deceptive schemes that served to vastly overstate Winstar's business success, sales and earnings and to facilitate a massive fraud on public investors. Among other things, Winstar engaged in numerous highly suspicious and unusual "end-of-quarter" transactions with Lucent - Winstar's largest supplier and single largest source of financing - and with other parties that served to falsely and artificially inflate the Company's reported sales and earnings. Most of these transactions lacked economic substance and could not properly serve as the basis for reported sales and revenues. As a result, much of the Company's reported revenues and earnings during the Class Period were fictitious in nature.
NOTE: Winstar is not named as a defendant in this case because it filed for bankruptcy protection in April 2001.