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Case Status:    SETTLED
On or around 12/08/2008 (Other)

Filing Date: May 09, 2002

According to the Order and Final Judgment, entered on April 23, 2007, from U.S. District Judge Honorable James Ware of the U.S. District Court of Northern California, the case was settled. Additionally, an Order Awarding Plaintiffs’ Counsel’s Attorneys Fees And Reimbursement Of Expenses as well as an Order Approving Plan Of Allocation Of Settlement Proceeds were also filed.

A Stipulation of Settlement and Release was filed on December 12, 2006. Defendants agreed to a settlement of $80,000,000. On December 21, 2006, the Court entered the Order denying the defendants’ motion to dismiss. Specifically, the Order states that as a result of the Court's December 18, 2006 Order Granting Preliminary Approval of Settlement, the Court denies Defendants' motion to dismiss Plaintiffs' Fifth Amended Complaint as moot.

On May 12, 2006, the plaintiffs filed a Fourth Amended Class Action Complaint. The complaint was again amended when the plaintiffs filed a Plaintiffs’ Fifth Amended Class Action Complaint on June 30, 2006. On August 16, 2006, the defendants filed a motion to dismiss the Fifth Amended Class Action Complaint.

On April 6, 2006, the Honorable Judge James Ware granted in part and denied in part the Defendants' Motion to dismiss the complaint. Specifically, in regards to the Plaintiffs' allegations of loss prior to March 20, 2002, the Defendants' Motion is granted with prejudice. In regards to allegations of loss revealed by an April 25, 2002 disclosure, the Defendants' Motion is denied. The Plaintiffs have until May 12, 2006 to file an amended complaint addressing only losses subsequent to March 20, 2002.

The original complaint charges VeriSign and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company provides digital trust services that enable Web site owners, enterprises, communications service providers, e-commerce service providers and individuals to engage in secure digital commerce and communications. The complaint alleges that during the Class Period, defendants sought to artificially increase the Company's revenue and margins and to create the perception that its deferred revenue growth was derived organically. In fact, approximately 10% of the Company's revenue was derived from sales to small companies in which VeriSign had invested and from dubious "barter transactions." VeriSign's revenues and earnings derived from related parties were dubious at best. Specifically, whenever a two-way set of transactions occurs in which a company acts as both the lender and service provider, an investor lacks assurance as to whether the related parties would have made similar decisions regarding purchases in the absence of financing from that company. Accordingly, despite the Company's claims that such transactions were separately negotiated and recorded at terms the Company considered to be at arm's length and fair value, the revenue and earnings that VeriSign recognized from its relationship with these customers was not an accurate measure of the "real" demand for VeriSign's products. Equally dubious was the quality of the non-monetary portion of revenue recorded from reciprocal agreements. As part of their effort to boost the price of VeriSign stock, defendants misrepresented VeriSign's true prospects in an effort to conceal VeriSign's improper acts until they were able to sell at least $26 million worth of their own VeriSign stock and use VeriSign's shares to acquire companies in stock-for-stock transactions. In order to overstate revenues and assets, VeriSign violated Generally Accepted Accounting Principles and SEC rules by, among other things, engaging in improper barter transactions and affiliate sales. These transactions had the effect of dramatically overstating the Company's margins and financial statements. On the Company's partial disclosures on April 25, 2002, the Company's shares plummeted by more than 50%.

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