According to a press release dated August 15, 2007, on July 13, 2007, the U.S. District Court for the Eastern District of Pennsylvania granted final approval of an attorneys' fees award in the amount of $21,390,000, representing 23% of a $93 million securities fraud class settlement.
In a press release dated July 18, 2007, a federal judge has granted final approval of a $93 million settlement in a securities fraud suit against CIGNA Corp. that accused the company of hiding the fact that it was experiencing significant problems in an overhaul of its computer systems and that its stock price had plummeted by 45 percent when news of the problems was disclosed. In his 12-page opinion in In re CIGNA Corp. Securities Litigation, U.S. District Judge Michael M. Baylson of the Eastern District of Pennsylvania also approved a $6 million settlement in a related derivative and awarded more than $23.5 million in attorney fees and costs to the plaintiffs lawyers. In the class action suit, Baylson awarded more than $21.3 million in attorney fees to the plaintiffs' team, led by attorney Sherrie R. Savett of Berger & Montague, who represented the lead plaintiff, the Pennsylvania State Employees Retirement System (SERS). Baylson also awarded $720,000 in attorney fees to the plaintiffs lawyers in the derivative suit -- Robert I. Harwood and Daniella Quitt of Harwood Feffer in New York and Jacob A. Goldberg of Faruqi & Faruqi in Elkins Park, Pa. The fees were justified, Baylson found, because "the amount of the settlement in this case is significant and represents one of the largest securities settlements in this district."
In a press release dated February 14, 2007, YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the above Court dated January 24, 2007, that a hearing will be held on April 27, 2007 at 9:30 a.m. in Courtroom 3A, U.S. Courthouse, 601 Market Street, Philadelphia, PA 19106, to determine whether the proposed settlement of the above-captioned action ("Action") for $93,000,000 in cash (the "Settlement") should be approved by the Court as fair, reasonable and adequate, and in the best interests of the Class; whether to direct the parties to consummate the Settlement in accordance with the terms and conditions of the Stipulation and Agreement of Settlement ("Stipulation") and to dismiss with prejudice the Action and the claims of the Class Members; and whether to award Plaintiffs' Co-Lead Counsel attorneys' fees and reimbursement of out-of-pocket expenses; whether to award reimbursement of costs and expenses for representation of the Class; and whether the Plan of Allocation should be approved by the Court. Unless otherwise noted, defined terms in this Summary Notice of Pendency and Settlement of Class Action have the same meaning as those terms are defined in the Stipulation and the Notice of Pendency and Settlement of Class Action ("Notice").
In a press release dated December 8, 2006, CIGNA announced today that it has reached an agreement to resolve claims filed in federal court against the company and certain of its officers in 2002 on behalf of a class of CIGNA shareholders. The settlement, which specifies $93 million to be paid to the plaintiffs and their attorneys, is subject to a definitive written agreement by the parties and approval by the U.S. District Court for the Eastern District of Pennsylvania. The settlement is also dependent upon a certain level of class participation. A fairness hearing before the Court is expected to be held in April 2007 with final approval expected shortly thereafter.
On March 20, 2006, the plaintiffs filed a Second Revised Consolidated Amended Class Action Complaint. On April 6, 2006, the defendant Cigna filed a motion for summary judgment which was later denied in the Order entered on August 21, 2006. On August 31, 2006, Cigna filed another motion for summary judgment which is currently pending before the court. On May 30, 2006, the plaintiffs filed a motion to certify the class. The motion was granted on August 21, 2006.
According to the Company’s FORM 10-K for the fiscal year ended December 31, 2005, in late 2002, several purported class action lawsuits were filed against CIGNA and certain of its officers by individuals seeking to represent a class of purchasers of CIGNA securities from May 2, 2001 to October 24, 2002. The complaints allege, among other things, that the defendants violated Section 10(b) of, and Rule 10b-5 under, the Securities Exchange Act of 1934 by misleading CIGNA shareholders with respect to the company’s performance during the class period. Plaintiffs seek compensatory damages and attorneys’ fees. In 2003, these suits were consolidated in the United States District Court for the Eastern District of Pennsylvania as In re CIGNA Corp. Securities Litigation. CIGNA’s motions to dismiss certain claims were granted in 2004 and 2005. In January 2006, the lead plaintiff filed an amended complaint to conform to Court Orders dismissing claims related to certain issues and statements.
The original complaint charges Cigna, its Chief Executive Officer, its President and Chairman of the Board, its Chief Financial Officer and Executive Vice President, and its Chief Accounting Officer with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, by issuing a series of materially false and misleading statements to the market during the Class Period.
As alleged in the Complaint, throughout the Class Period, defendants
issued press releases announcing CIGNA's quarterly and annual results of
operations and filed reports with the SEC, which reported its financial
performance and seemingly impressive earnings growth and represented
that operating income in 2002 was expected to be $1.1 billion.
CIGNA's representations issued during the Class Period were materially
false and misleading when made because they failed to disclose that
CIGNA had failed to adequately reserve (by at least hundreds of millions
of dollars) for its obligations under the Guaranteed Minimum Death
Benefits ("GMDB") reinsurance that it had provided, thereby artificially
inflating its earnings and net worth and its projected income figure was
lacking in any reasonable basis when made.
On September 3, 2002, after the market closed CIGNA issued a press
release announcing that it has instituted a program "to manage run-off
reinsurance exposure" for its GMDB obligations, requiring it to take a
$720 million after-tax ($1.1 billion pre-tax) charge. In reaction to
the announcement, the price of CIGNA common stock dropped by 10% during the day, closing at $82.65 on September 3, 2002, down from an August 30, 2002 (the previous trading day) close of $85.12 per share.
On September 4, 2002, Standard & Poors Rating Services issued a press
release announcing that it had place CIGNA's A+ counterparty credit
rating and CIGNA's financial strength ratings on CreditWatch with
negative implication. In reaction to this announcement, the price of
CIGNA common stock dropped 6%, closing at $80 per share on September 4, 2002, down from $85.12 on August 30, 2002. On October 18, 2002, CIGNA
issued a press release announcing that it was taking an additional $315
million charge relating to a decision handed down in the Unicover
arbitration. Together with the charge for the GMDB obligations, CIGNA's
write downs relating to its discontinued reinsurance business topped one
billion dollars for the third quarter.
Finally, on October 24, 2002, the Company announced that, contrary to
its recent affirmations, it would not meet its third quarter and year
2002 guidance - even excluding the recent $720 million and $315 million
charges. In reaction to this announcement, the price of CIGNA common
stock plummeted by 42%, falling from a $63.60 per share close on October
24, 2002 to trade as low as $36.81 per share on October 25, on extreme