The original Complaint alleges 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 March 23, 2001 and February 13, 2002, thereby artificially inflating the price of FLAG shares. The complaint alleges that throughout the Class Period, FLAG reported strong year-over-year revenue growth. Unbeknownst to investors, however, as alleged in the complaint, FLAG was experiencing diminishing revenue growth. The complaint alleges that in order to create the impression that FLAG was continuing to experience growth, the Company engaged in a series of reciprocal transactions with certain competitors for the purchase and sale of dark fiber optic cable -- the so-called dark fiber swap. The complaint alleges that as a result of these transactions, FLAG artificially inflated its operating results and materially misrepresented its financial results at all relevant times.
On October 18, 2002, this Court consolidated the suits against defendants, named Peter T. Loftin lead plaintiff and appointed Milberg Weiss Bershad Hynes & Lerach LLP. The defendants filed several motions to dismiss on July 7, 2003, but before any ruling the plaintiffs filed a Second Amended Complaint. On February 25, 2004, Judge William C. Conner granted the defendants motion to dismiss for lack of personal jurisdiction and plaintiffs were given leave to replead his claims. Plaintiffs filed a Third Consolidated Amended Complaint on April 14, 2004. The defendants again filed several motions to dismiss on June 23, 2004.
In an Opinion and Order dated January 12, 2005, this Court granted the motions of Flag, Evans and Verizon, denied in part and granted in part Bautista’s motion to dismiss and denied in their entirety the motions filed by Bande, McCormack, Rubin, Petri, McQuaid, Seskin, Suan and Citigroup. Plaintiffs’ claims against Flag and Evans were dismissed with prejudice, and their claims against Verizon were dismissed without prejudice.
On September 1, 2005, the Court issued the Order and Partial Final Judgment signed by U.S. District Judge William C. Conner. According to the Order The Court finds that (i) in light of the grounds on which the Court dismissed FTHL and Andrew Evans, the claims asserted against FTHL and Mr. Evans are separate and extricable from the remaining claims in the litigation; (ii) the entry of a final judgment will advance the interest of sound judicial administration, and accordingly, (iii) there is no just reason for delay in the entry of final judgment as to FTHL and Mr. Evans. The claims asserted are hereby dismissed with prejudice. The case is currently continuing against the remaining defendants in this action.
On September 4, 2007, the Court entered the Opinion and Order granting the plaintiff’s motion to certify the proposed class action. Accordingly, the following proposed class is hereby certified: All persons or entities who purchased common stock of Flag Telecom Holdings, Ltd. ("Flag" or the "Company") between March 6, 2000 and February 13, 2002, inclusive, as well as those who purchased Flag common stock pursuant to or traceable to the Company's initial public offering between February 11, 2000 and May 10, 2000, inclusive (collectively, the "Class Period").
On October 15, 2007, the plaintiff filed a Fourth Amended Complaint and later filed a Corrected Fourth Consolidated Amended Complaint on January 11, 2008.
On May 13, 2008, the defendants filed a motion for summary judgment, which was denied on May 1, 2009.
On June 23, 2010, the Court entered the Preliminary Order signed by Judge Colleen McMahon certifying the action as a class action.
According to a press release dated July 21, 2010, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the Court, that the above-captioned action has been certified as a class action and that a settlement for a total of $24.4 million in cash has been proposed. A hearing will be held before the Honorable Colleen McMahon in the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007-1312, at 2:00 p.m., on October 29, 2010 to determine whether the proposed settlement should be approved by the Court as fair, reasonable, and adequate, and to consider the application of Plaintiffs’ Counsel for attorneys’ fees and reimbursement of expenses.
According to the Decision and Order signed by Judge Colleen McMahon on November 8, 2010, for the reasons set forth in this Order, the Court grants the motion for an order granting: (l) final approval of the proposed Settlement; (2) final approval of the proposed Plan of Allocation for the settlement proceeds; (3) reimbursement of $1,910,420.76 for expenses incurred in connection with the prosecution and settlement of the Action and attorneys' fees in the amount of 30% of the remaining balance of the Settlement Fund after reimbursement of these expenses and payment of any PSLRA awards to the Lead Plaintiffs; and (4) awards to Lead Plaintiffs for their services in prosecuting the Action in the amounts of $100,000 for Lead Plaintiff Peter T. Loftin and $5,000 for Lead Plaintiff Joseph Coughlin.