According to the latest docket posted, on September 13, 2005, the Court entered the Final Judgment and Order signed by U.S. District Judge Theodore H. Katz. The action is settled and the case is closed.
By the Notice Of Pendency Of Class Action dated May 10, 2005, Aetna has agreed to pay $5,000,000 (the "Settlement Amount") into an interest-bearing account for the benefit of the Class. The litigation, having commenced in November, 2001, was consolidated into a single case in April, 2002. Lead Plaintiffs filed a Consolidated and Amended Class Action Complaint ("the Complaint") on June 7, 2000. On July 22, 2002, Aetna filed a motion asking the Court to dismiss Lead Plaintiffs' claims. Lead Plaintiffs filed their opposition on September 5, 2002. This motion was fully briefed and oral argument occurred. The motion was still pending at the time of reaching this Settlement.
The original complaint charges Aetna and certain of its officers and directors with issuing a series of material misrepresentations to the market before and during the Class Period, thereby artificially inflating the price of Aetna common stock. Specifically, the complaint alleges that Aetna issued statements concerning, among other things, the ability of Aetna to control and monitor its costs and obligations in light of the Company's expected and actual sales. Defendants knew that Aetna's management systems, procedures and controls for
monitoring such costs were lacking but they made positive statements about
Aetna's management, controls, and abilities to control costs while concealing
the defective management systems. Between April 10, 2001 and May 8, 2001, Aetna surprised the market by announcing higher-than-anticipated medical costs during the fourth quarter of 2000 and the first quarter of 2001, faulty record-keeping which caused the payment of millions of dollars in medical claims for former clients, and the absence of necessary management control systems required for management to know Aetna's obligations and proper medical costs. Finally, on June 7, 2001, it was revealed that the cause of much of the Company's financial woes was that: "Poor record-keeping has resulted in ... paying millions of dollars in medical claims for people whose benefits have expired." During the Class Period, the value of Aetna shares had been artificially inflated to almost $43.00 per share but, as a result of these disclosures, Aetna's stock price plunged in excess of forty percent to below $25.00 per share.