According to the Company’s FORM 10-Q for the quarterly period ended April 29, 2006, on June 26, 2003, the plaintiffs announced that a settlement among plaintiffs, the issuer defendants and their directors and officers, and their insurers has been structured, a part of which provides that the insurers for all issuer defendants would guarantee up to $1 billion to investors who are class members, depending upon plaintiffs’ success against non-settling parties. The Company’s board of directors has approved the proposed settlement, which will result in the plaintiffs’ dismissing the case against the Company and granting releases that extend to all of the Company’s officers and directors. Definitive settlement documentation was completed in early June 2004 and first presented to the court on June 14, 2004. On February 15, 2005, the court issued an opinion preliminarily approving the proposed settlement, contingent upon certain modifications being made to one aspect of the proposed settlement — the proposed “bar order”. On May 2, 2005 the issuer defendants and plaintiffs jointly submitted an amendment to the settlement agreement conforming the language of the settlement agreement with the court’s February 15, 2005 ruling regarding the bar order. The court on August 31, 2005 issued an order preliminarily approving the settlement and setting a public hearing on its fairness for April 24, 2006 due to difficulties in mailing the required notice to class members. On April 24, 2006, the court held a public hearing on the fairness of the proposed settlement. The court took the matter under submission and has not yet ruled.
As summarized by the same SEC filing, on July 31, 2001, a putative class action suit was filed against two investment banks that participated in the underwriting of the Company’s initial public offering, or IPO, on June 29, 2000. That lawsuit, which did not name Marvell or any of its officers or directors as defendants, was filed in the United States District Court for the Southern District of New York. Plaintiffs allege that the underwriters received “excessive” and undisclosed commissions and entered into unlawful “tie-in” agreements with certain of their clients in violation of Section 10(b) of the Securities Exchange Act of 1934. Thereafter, on September 5, 2001, a second putative class action was filed in the Southern District of New York relating to the Company’s IPO. In this second action, plaintiffs named three underwriters as defendants and also named as defendants Marvell and two of its officers, one of whom is also a director. These two actions relating to the Company’s IPO have been consolidated with hundreds of other lawsuits filed by plaintiffs against approximately 40 underwriters and approximately 300 issuers across the United States. Defendants in the consolidated proceedings moved to dismiss the actions. In February 2003, the trial court issued its ruling on the motions, granting the motions in part, and denying them in part. Thus, the cases may proceed against the underwriters and the Company as to alleged violations of section 11 of the Securities Act of 1933 and section 10(b) of the Securities Exchange Act of 1934. Claims against the individual officers have been voluntarily dismissed with prejudice by agreement with plaintiffs.
The complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about June 27, 2000, Marvell commenced an initial public offering of 6,000,000 of its shares of common stock at an offering price of $15 per share (the "Marvell IPO"). In connection therewith, Marvell filed a registration statement, which incorporated a prospectus (the "Prospectus"), with the SEC. The complaint further alleges
that the Prospectus was materially false and misleading because it failed to
disclose, among other things, that: (i) defendants had solicited and received
excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the
restricted number of Marvell shares issued in connection with the Marvell IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate Marvell shares to those customers in the Marvell IPO in exchange for which the customers agreed to purchase additional Marvell shares in the aftermarket at pre-determined prices.