According to the Company’s Form 10-K for the fiscal year ended December 31, 2005, plaintiffs and the issuer defendants, including the Company, have agreed to a stipulation of settlement, in which plaintiffs will dismiss and release their claims in exchange for a guaranteed recovery to be paid by the insurance carriers of the issuer defendants and an assignment of certain claims. The stipulation of settlement for the claims against the issuer-defendants, including the Company, has been submitted to the Court. On February 15, 2005, the Court preliminarily approved the settlement contingent on specified modifications. On August 31, 2005, the Court entered an order confirming its preliminary approval of the settlement. A hearing on the fairness of the settlement to the shareholder class is set for April 24, 2006.
As summarized by the same SEC filing, in July 2001, the first of a series of putative securities class actions, Brody v. OpenTV Corp., et al., was filed in United States District Court for the Southern District of New York against certain investment banks which acted as underwriters for the Company’s initial public offering, the Company and various of its officers and directors. These lawsuits were consolidated and are captioned In re OpenTV Corp. Initial Public Offering Securities Litigation. The complaints allege undisclosed and improper practices concerning the allocation of the Company’s initial public offering shares, in violation of the federal securities laws, and seek unspecified damages on behalf of persons who purchased OpenTV Class A ordinary shares during the period from November 23, 1999 through December 6, 2000. The Court has appointed a lead plaintiff for the consolidated cases. On April 19, 2002, the plaintiffs filed an amended complaint. Other actions have been filed making similar allegations regarding the initial public offerings of more than 300 other companie. All of these lawsuits have been coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Defendants in these cases filed an omnibus motion to dismiss on common pleading issues. Oral argument on the omnibus motion to dismiss was held on November 1, 2002. All claims against the Company’s officers and directors have been dismissed without prejudice in this litigation pursuant to the parties’ stipulation approved by the Court on October 9, 2002. On February 19, 2003, the Court denied in part and granted in part the omnibus motion to dismiss filed on behalf of defendants, including the Company. The Court’s Order dismissed all claims against the Company except for a claim brought under Section 11 of the Securities Act of 1933.
The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about November 22, 1999 OpenTV
commenced an initial public offering of 7,500,000 of its shares of common stock at an offering price of $20 per share (the "OpenTV IPO"). In connection
therewith, OpenTV 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) Merrill Lynch had solicited and received
excessive and undisclosed commissions from certain investors in exchange for which Merrill Lynch allocated to those investors material portions of the
restricted number of OpenTV shares issued in connection with the OpenTV IPO; and (ii) Merrill Lynch had entered into agreements with customers whereby Merrill Lynch agreed to allocate OpenTV shares to those customers in the OpenTV IPO in exchange for which the customers agreed to purchase additional OpenTV shares in the aftermarket at pre-determined prices.