According a law firm’s website, prior to ruling on the pending Motions for Summary Judgment and the Motion to Dismiss the Second Amended Complaint, Lead Plaintiffs and Defendants agreed to settle the claims against these Defendants.
Pursuant to the terms of this second proposed partial settlement, which was preliminarily approved by the Court on May 10, 2005, a settlement fund in the amount of $2,250,000, plus interest that accrues on the fund prior to distribution, will be created for the benefit of the Class. A hearing, to determine, among other things, whether this proposed second partial settlement is fair, reasonable and adequate was held on July 20, 2005. Judge Tarnow signed an Order and Final Judgment that same day granting final approval of this Settlement.
Earlier, according to the same website, on May 10, 2002 an Amended Complaint was filed against Individual Defendants, Audit Committee Defendants, and KPMG, LLP. On September 30, 2002 the Individual and Audit Committee Defendants filed their Motions to Dismiss the Amended Complaint and KPMG filed its Motion to Dismiss on November 11, 2002. On February 11, 2003, a hearing Defendants' motions was held and Judge Tarnow issued and Order on July 21, 2003 granting KPMG's Motion to Dismiss and granting in part and denying in part the remaining Defendants' motions. Beginning September 2, 2003 the Individual Defendants filed their answers to the Amended Complaint.
On January 28, 2003 Lead Plaintiffs filed a motion for class certification and a hearing on this motion was held on October 2, 2003. On January 26, 2004, Judge Tarnow signed an order certifying the class.
On May 24, 2004, Lead Plaintiffs and Defendant, KPMG entered into a Stipulation and Agreement of Settlement to settle the claims against KPMG. Pursuant to the terms of this proposed partial settlement, a settlement fund in the amount of $2,000,000, plus interest that accrues on the fund prior to distribution, will be created by KPMG for the benefit of the Class. On June 22, 2004, Judge Tarnow issued an order granting preliminary approval of the proposed partial settlement and setting a hearing, to determine, among other things, whether the proposed settlement is fair, reasonable and adequate for September 9, 2004. The hearing was held on September 9, 2004 and Judge Tarnow granted Final Approval of the settlement with KPMG that same day.
On July 9, 2004, an Individual Defendant filed a Motion for Summary Judgment as to the remaining claims against him and the Audit Committee Defendants filed their Motion for Summary Judgment on July 14, 2004. On August 4, 2004, Lead Plaintiffs' filed a Consolidated Memorandum of Law in response to these motions.
On August 31, 2004, Lead Plaintiffs filed a Second Amended Complaint asserting new claims against new Defendants. On September 14, 2004, these Defendants filed a Motion to Dismiss this complaint and on October 12, 2004, Lead Plaintiffs filed their opposition to Defendants' motion.
The original complaint alleges that the company violated the federal securities laws by issuing a series of material misrepresentations to the market concerning its financial results for fiscal 2000 and the first quarter of fiscal 2001. Specifically, the reported net loss of $41.8 million for fiscal 2000 was understated by at least 31% and was actually $56.4 million for that fiscal year period. Net loss for the first quarter of fiscal 2001, which was previously reported as $7.6 million, was understated by a staggering 350% and was actually $34.7 million for the quarter. The Company stated that its investigation relating to these financial misrepresentations would continue and that additional restatements/adjustments may be necessary. Also, as a result of these restatements, the Company revealed that it was in breach of certain financial covenants under its senior credit facility. On September 5, 2001, when this adverse information was disclosed, the stock was halted from trading and opened the following day at $2.10 per share. This represented a 50% decline from the prior day's trading price of $4.15 per share and more than a 90% decline from the $20 per share Hayes stock had been trading at during the class period.
NOTE: Hayes Lemmerz filed for bankruptcy on December 11, 2001 and all proceedings against it were stayed.