On August 31, 2006, the Court entered the Preliminary Approval Order, preliminarily approving the settlement of the action as to all defendants in accordance with the Stipulation and Agreement of Settlement dated August 3, 2006. On November 15, 2006, the Court entered the Judgment, enforcing the settlement and dismissing the action with prejudice.
According to the Company’s FORM 10-K For Fiscal Year Ended December 31, 2005, in January 2006, the Company and certain of its current and former executive officers who are also defendants agreed in principle to settle this action for $8 million in cash. The Company’s insurer will fund the entire amount of the settlement payment. This agreement in principle is subject to completion of a definitive settlement agreement and approval by the United States District Court for the Southern District of New York.
As summarized by the same SEC filing, in September 2001, a purported class action lawsuit, entitled Sternbeck v. Sirius Satellite Radio, Inc., 2:01-CV-295, was filed against the Company and certain of its current and former executive officers in the United States District Court for the District of Vermont. Subsequently, additional purported class action lawsuits were filed. These actions were consolidated in a single purported class action, entitled In re: Sirius Satellite Radio Securities Litigation, No. 01-CV-10863, pending in the United States District Court for the Southern District of New York.
The original class action lawsuit alleges that defendants violated the federal securities laws by failing to disclose facts known to them, or recklessly disregarded by them, which demonstrated that the announced commercial launch dates for the Company's satellites required for the Company's service, published throughout the Class Period, were impossibly ambitious. Defendants knew, or recklessly disregarded, that it would be impossible for the Company to offer its service commercially by the end of 2000, as initially disclosed, or early in 2001, as subsequently disclosed. The Complaint alleges that at all times during the Class Period Defendants issued materially false and misleading statements and press releases concerning when the Company's service would be commercially available, which caused the market price of Sirius common stock to be artificially inflated throughout the Class Period. As a result of purchasing shares of Sirius common stock at artificially inflated prices, Plaintiff and the Class have suffered damages.