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 January 30, 2001 and November 14, 2001, thereby artificially inflating the price of Montana Power securities. Throughout the Class Period, as alleged in the Complaint, defendants issued positive statements regarding the Company's successful restructuring from an energy company into a standalone telecommunications company. These statements were materially false and misleading because they failed to disclose material adverse facts which were known to defendants or recklessly disregarded by them, including: (a) that the Company was having problems with the assets that it acquired from Qwest Communications International ("Qwest") -- which had become its principal assets in lieu of the power generation assets which it had sold -- and in its relationship with Qwest. As a result of these problems, the Company was experiencing declining revenues in its telecommunications business; (b) that the Company's broadband division was experiencing declining demand for its products and services; and (c) as a result of the foregoing, the Company's purported transformation to a standalone telecommunications company was not meeting with success. On November 14, 2001, the last day of the Class Period, Montana Power issued a press release announcing its financial results for the third quarter of 2001, the period ending September 30, 2001, and disclosed that the Company's quarterly losses, "reflect the continued slowing of the nation's economy and the difficult transition of Montana Power from a diversified energy company to Touch America. " The press release further revealed that, as a result of its poor third quarter results, the Company was not in compliance with certain financial covenants under its Senior Secured Credit Facility. Finally, the press release revealed that the Company was engaged in litigation with Qwest concerning its purchase of certain assets from Qwest in June 2000 -- litigation which had been ongoing since August 2001, but not meaningfully revealed to investors. Following this announcement, the price of Montana Power common stock declined from $5.16 per share to $4.70 per share on heavy trading volume. In total, investors saw Montana Power common stock decline from a Class Period high of $22.78.
On March 25, 2003, Judge Sam E. Haddon granted the motion to consolidate several related actions under In Re Touch America Holdings, Inc. Securities Litigation, Cause Number CV-02-057-BU-SHE. On June 20, 2003, Judge Haddon stayed all consolidated actions pending resolution of bankruptcy. On July 17, 2003, defendant Touch America filed a notice of bankruptcy. On May 18, 2009, the Honorable Daniel Weinstein was appointed as mediator. Since the March 2003 consolidation order, Judge Haddon has denied several plaintiff’s motions to appoint lead plaintiff and lead counsel.
On January 11, 2010, a Settlement Agreement was filed. The proposed settlement is in the amount of $19 million. On February 10, 2010, Judge Haddon certified the securities settlement class.
On May 20, 2010, the Fairness Hearing was held before Judge Sam E Haddon. The Court finds settlement is fair and reasonable and will approve attorney fees and costs request. Defendant Gannon has until June 18th to notify the Court whether or not he agrees with the settlement; if not the case will be litigated. Plaintiffs to submit within 10 days a proposed form of Judgment.
The Court entered the Order and Final Judgment on June 22, 2010. The action is dismissed with prejudice.