On March 7, 2007, the Court entered the Final Judgment and Order of Dismissal with Prejudice signed by U.S. District Rebecca R. Pallmeyer. According to the Order, the Motion for Final Approval of Settlement, Plan of Allocation and Class Certification and for Award of Attorneys fees and Reimbursement of Expenses is granted. Further, the Court entered the Orders approving the Plan of Allocation and awarding attorneys' fees in the amount of 30% of the Settlement Fund and reimbursement of expenses in an aggregate amount of $237,536.54.
On November 3, 2006, a Stipulation of Settlement was filed. According to the Stipulation, a settlement fund of $17,500,000 in cash has been established. On November 6, 2006, the Judge Rebecca R. Pallmeyer granted the motion for preliminary approval of class action settlement. The Fairness Hearing is set for March 2, 2007.
On March 11, 2003, the Court entered the Order consolidating the actions under case No. 02 C 8946. The Court also appointed lead plaintiff and lead counsel. On May 12, 2003, a Consolidated Amended Complaint was filed. On October 31, 2003, another Consolidated Amended Complaint was filed by the lead plaintiffs. Defendants KPMG, LLP, Spiegel Holdings Inc., and the individual defendants filed motions to dismiss the claims. On July 8, 2004, the Court entered the Minute Order granting, denying or granting in part and denying in part the defendants’ motions to dismiss. Another Consolidated Amended Complaint was then filed on August 4, 2004. On September 17, 2004, defendant KPMG LLP filed a motion to dismiss the consolidated amended complaint which was later granted on July 29, 2005. According to the Order, Plaintiffs should further amend the complaint to reflect the court's ruling that KPMG is no longer a proper defendant in this case. On May 23, 2006, a Third Consolidated Amended Complaint was filed.
The original complaint charges Spiegel, Inc., Spiegel Holdings, Inc. and certain officers and directors with issuing false and misleading statements concerning its business and financial condition. According to its press releases, throughout the Class Period, Spiegel was a "leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, e-commerce sites, and more than 600 specialty retail and outlet stores. The Spiegel Group's businesses include Eddie Bauer, Newport News, Spiegel and First Consumers National Bank." Specifically, the complaint alleges that Spiegel's financial statements and results of operations were each and all false and misleading and prepared in violation of GAAP, including, but not limited to SFAS 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", due to the fact that Spiegel's accounting of its credit card business improperly inflated its income and earnings, failed to account for increasing charge-offs, and grossly inflated the value of its securitized receivables.
On April 19, 2002, Spiegel finally revealed the true facts regarding the deterioration of its credit card business and the devastating impact of this deterioration on Spiegel's overall business health. On April 22, 2002, the next trading day following Spiegel's April 19, 2002 announcements, Spiegel's Class A Non-Voting Common Stock fell from a high of $3.15 on April 19, 2002 to a low of $1.01 on April 22, 2002 or a one-day decline of more than 67%, on ten times normal trading volume, and a decline of more than 90% from the Class Period high of $10.71. On June 3, 2002, the Nasdaq delisted "the company's Class A common stock on the Nasdaq National Market System effective with the open of business on June 3, 2002, based on the company's filing delinquencies and other public interest concerns."
NOTE: Spiegel was dropped from the case after it filed for bankruptcy.
