According to the docket, on July 18, 2002, the Court entered the Order, pursuant to FRCP 23(b)(3), for purposes of settlement, the action was certified as a class action on behalf of all persons who purchased or otherwise acquired the common stock of StarMedia Network, Inc. between April 11, 2000 and February 1, 2002. A hearing was scheduled for September 30, 2002. The hearing was held, and on October 1, 2002, the Court entered the Order and Final Judgment approving the settlement as fair, reasonable and adequate. Plaintiffs' Counsel was awarded $950,000 as attorneys’ fees and $55,841.22 in reimbursement of expenses. The case was closed.
Pursuant to the Settlement described in the Notice of Settlement, a Settlement Fund consisting of $3,150,000 in cash, plus interest, was established.
The original complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between April 11, 2000 and November 19, 2001 concerning the Company's financial performance. The complaint alleges that Starmedia reported artificially inflated financial results in press releases and filings made with the SEC by improperly recognizing revenue in violation of Generally Accepted Accounting Principles (``GAAP''). Specifically, the complaint alleges that two of the Company's primary subsidiaries, AdNet S.A. de C.V. and StarMedia Mexico, S.A. de C.V, had engaged in improper accounting practices which had the effect of materially overstating StarMedia's reported revenues and earnings by at least $10 million. On November 19, 2001, as alleged in the complaint, Starmedia issued a press release announcing that based on the ``preliminary'' results of an internal investigation into its accounting practices, it expects to restate its financial statements for fiscal year 2000 and the first two quarters of 2001 and that those financial statements should not be relied upon. The Company further reported that its Chief Financial Officer had ``resigned.'' Immediately following the announcement of the restatement, the NASDAQ Stock Market halted trading in StarMedia stock, pending the receipt of additional information from the Company. StarMedia stock last traded at $0.38 per share, which is 98.5% less than the Class Period high of $25.50, reached on April 11, 2000.