According to the docket, on November 3, 2000, the Court entered the Order awarding plaintiffs’ settlement counsel attorneys' fees of 30% of the Settlement Fund and reimbursement of litigation expenses in the amount of $118,260.72. The Lead Plaintiff Bess Rakow was awarded $2,500. The Court also approved the plan of allocation of settlement proceeds. The Court further entered the Final Judgment and Order of Dismissal with Prejudice and the case was closed.
Earlier, on July 24, 2000, a Stipulation of Settlement was filed. By the Notice of Pendency, the proposed settlement created a fund in the amount of $4,700,000 in cash.
The complaint charges STB and certain of its officers and directors with
violations of the Securities Exchange Act of 1934. STB manufactured and sold
multimedia systems and specialized technology products, primarily for use in
personal computers. In May 1999 STB was acquired by 3Dfx Interactive Inc. The
complaint alleges that pursuant to defendants' common scheme and wrongful
course of business, defendants knowingly made false and misleading statements
about the demand for and success of STB's products while concealing the fact
that because of ongoing quality problems with STB products, two of STB's
largest customers had informed defendants that they were no longer willing to
accept and/or pay for shipments of defective STB products. In an attempt to
raise badly needed cash for STB and sell some of their own STB shares via a
public offering, defendants attempted to conceal these problems, and falsely
represented that STB was generating record performance, based in large part
upon the particularly strong paced results of STB's Specialized Technology
Group and the phenomenal success of the Velocity 128 graphics accelerator which
ensured that STB would post strong earnings per share growth during FY97-FY98.
These false statements were designed to and did allow STB stock to continue to
trade at artificially inflated levels as high as $30-1/2 per share, and allowed
defendants to complete the sale of $66 million of STB stock at dramatically
inflated levels. Then, on May 1, 1998, just five weeks after defendants had
sold $66 million of STB shares at $22 per share, the price of STB shares
plummeted to just $10-7/8 per share as defendants revealed that, contrary to
their prior representations, certain of STB's large OEM customers were delaying
purchases and that STB's gross margins had been ravaged. Defendants'
revelations devastated the price of STB stock, and as investors came to
appreciate the poor condition of STB's operations, the price of STB dropped to
less than $6 per share.