On July 7, 2007 parties filed a Stipulation of Settlement outlining an agreement that includes $40 million in exchange for a dismissal of all claims. In November 2007 plaintiffs filed a motion for preliminary approval of a settlement, which was approved my the judge on January 25,2008. The settlement was finalized on May 16, 2008. Counsel was granted $8 million in fees (20%) and reimbursement of $408,738.71 in expenses.
According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on September 12, 2005, the court issued a Memorandum and Order denying in part, and granting in part, the motion to dismiss. The court granted the motion with respect to Lead Plaintiff’s claims concerning the Company’s investments and denied the motion challenging the other alleged misstatements. Discovery, which had been stayed in this action pursuant to the Private Securities Litigation Reform Act of 1995, has now begun.
As summarized by the same SEC filing, on February 12, 2003, the first of six virtually identical putative securities class actions was filed in the United States District Court for the Eastern District of Tennessee. In two orders dated May 21, 2003, and January 22, 2004, the district court consolidated these actions under the caption In re UnumProvident Corp. Securities Litigation. On January 9, 2004, the Lead Plaintiff filed its consolidated amended complaint on behalf of a putative class of purchasers of UnumProvident stock between March 30, 2000 and April 24, 2003. The amended complaint alleges, among other things, that the Company issued misleading financial statements, improperly accounted for certain impaired investments, failed to properly estimate the Company’s disability claim reserves, and pursued certain improper claims handling practices. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. On March 19, 2004, the defendants filed a motion to dismiss the consolidated amended complaint.
The original complaint charges UnumProvident Corporation and certain of its
officers and directors with issuing false and misleading statements
concerning its business and financial condition. Specifically, the
complaint alleges that during the Class Period, defendants caused
UnumProvident's shares to trade at artificially inflated levels through
the issuance of false and misleading financial statements. The Company
failed to properly record the impairment to its investments and operated
"long-term denial factories," causing the Company's financial results to
be inflated. As a result, the Company's shares traded at inflated prices
enabling UnumProvident to raise proceeds of $250 million on June 13,
2002 in its bond offering.
The complaint further alleges that UnumProvident and its top officers inflated the prices of the Company's securities in order to pursue an accelerated securities sale
program. Defendants knew that by concealing UnumProvident's true
financial results they could foster the perception in the business
community that UnumProvident was a "growth company," i.e., it was the
only way UnumProvident could post the revenue and earnings per share
growth claimed by defendants. On February 5, 2003, UnumProvident
announced that it had recorded investment losses of $93 million and also
reported that it was responding to Securities and Exchange Commission
requests for information relating to its investment disclosures.