On July 26, 2007, a motion for distribution of class settlement fund was filed by the plaintiffs. As a result, the plaintiffs’ motion for distribution of class settlement fund was granted and an Order was entered on July 31, 2007.
On April 3, 2007, the Court entered the Mandate from the U.S. Court of Appeals for the Seventh Circuit. According to the Mandate, it is ordered that the joint motion for limited remand to allow District Court to consider proposed settlement, filed on March 6, 2007, by counsel for the appellant and counsel for the appellees, is granted to the extent that the clerk of this court shall remand this matter to the District Court. That day, the Court ordered that the Joint Motion For Entry Of An Order Approving Reallocation Agreement Following Remand From The Seventh Circuit Court Of Appeals is granted; and the Fee Reallocation Agreement is approved.
According to the latest docket posted, on August 17, 2005, the Court entered the Minute entry and the Memorandum Opinion and Order signed by U.S. District Judge James F. Holderman clarifying the Final Judment. On September 12, 2005, HA2003 Liquidating Trust filed a notice of appeal to the Order. The appeal is currently pending in the Seventh Circuit Court of Appeals.
In a press release dated August 31, 2005, the U.S. District Court for the Northern District of Illinois granted a motion by former investors to clarify a final order approving a shareholder class action settlement. Former HA-LO Industries Inc. investors reached a settlement with HA-LO as to the distribution of certain liability insurance policies for directors and officers, which was approved Dec. 29, 2004. The agreement provided the class members would receive 25% of the insurance proceeds, provided the members assigned their insurance claims to HA-LO. The class was required to exercise its option by the seventh day after the entry of a settlement approval, unless a different effective date was specified in the order. The order was entered on Dec. 29, 2004, but it mistakenly did not contain an appropriate effective date. HA-LO asserted that the class members negligently failed to exercise their options to receive a share of the insurance proceeds. The shareholders moved the court to clarify the settlement approval order and set an effective date for exercising the option. The district court granted the motion to clarify, noting that the approval order stated the shareholders would not receive the rights to their insurance claims until the approval order was effective. The order provided the shareholders would have seven days after entry of the approval order to exercise their rights if no date was set.
On October 5, 2004, the Court held the Fairness Hearing. For the reasons stated in open court and based on the oral report and recommendation finding the settlement to be fair, reasonable, and adequate, the Court recommends the final approval of class action settlement and allocation. On December 29, 2004, the Court entered the Order and Final Judgment of U.S. District Judge James F. Holderman, and the case was terminated.
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 materially false and misleading statements to the market between February 18, 1999 and November 23, 2001, concerning its financial performance for the Company's fiscal year 1998, 1999 and 2000 and the first quarter of 2001. Throughout the Class Period, defendants issued press releases reporting HALO's quarterly and year-end financial performance, and filed reports confirming such performance with the United States Securities and Exchange Commission. These reports positively portrayed HALO's performance during the Class Period. These statements, as alleged in the complaint, were materially false and misleading because the Company had, throughout the Class Period, improperly recognized revenues, thereby inflating its reported sales and earnings. On November 23, 2001, HALO issued a press release announcing the restatement of its previously filed financial statements for the period 1998 to 2000, and that the Company "may also restate its first quarter 2001 Form 10-Q." According to the press release, the restatement will have the effect of decreasing the Company's reported Class Period pretax income by a total of $15 million, including $1.2 million if the restatement includes the first quarter of 2001.
Note: As HA-LO has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code, it is not named as a defendant in this action.