On September 19, 2006, the Court entered the Order and Final Judgment signed by U.S. District Judge Naomi Reice Buchwald approving the settlement as fair pursuant to FRCP 54(b), certifying the class, and dismissing the complaint with prejudice. The case is now closed.
According to a press release dated June 29, 2006, a hearing will be held before the Honorable Naomi Reice Buchwald in the United States Courthouse, 500 Pearl Street, New York, New York 10007, at 9:15 a.m. on September 18, 2006 to determine whether the proposed Settlement, in the amount of $3.8 million, as set forth in the Stipulation and Agreement of Settlement, is fair, reasonable and adequate, and also to consider the proposed Plan of Allocation for the Settlement proceeds and the application of Plaintiffs' Co-Lead Counsel for attorneys' fees and reimbursement of expenses out of the Settlement Fund.
As summarized by the Notice of Pendency of Class Action dated June 22, 2006, in April 2003, several class action were consolidated into a single caseby Orders of the Court dated August 27, 2003 and January 5, 2004. The Consolidated Amended Class Action Complaint (“First Consolidated Complaint”) was filed and served on December 5, 2003, alleging, among other things, that Defendants issued materially false and misleadingstatements during the period August 1, 2002 to March 24, 2003 in violation of Sections 10(b) and 20 of the Securities Exchange Act of 1934 (the “1934 Act”). On February 3, 2004, Defendants moved to dismiss the First Consolidated Complaint. The Court issued an Order, dated September 24, 2004, granting Defendants’ motion in part and denying it in part. The Court dismissed, on jurisdictional grounds, claims by foreign or non-resident citizens who purchased their shares outside the United States. The Second Amended Consolidated Class Action Complaint (“Complaint”) was filed and served on October 28, 2004, alleging, among other things, that Defendants issued materially false and misleading statements during the period August 1, 2002 to March 24, 2003 in violation of sections 10(b) and 20 of the 1934 Act. On December 22, 2004, Defendants filed their motion for partial dismissal of the Complaint or for a more definite statement. The motion has been withdrawn without prejudice pending completion of the Settlement.
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 August 1, 2002 and March 24, 2003, thereby artificially inflating the price of ICI securities. Throughout the Class Period, as alleged in the Complaint, defendants issued numerous press releases in which they stated that they had resolved the Company's distribution and software problems that the Company had experienced at its Quest division's Fragrance & Food businesses. Defendants further stated that the Company was on track to report strong financial results, that the Company had cleared its backlog of customer orders and that the Company
had not lost any customers as a result of its production problems. The Complaint alleges that these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (a) that ICI's software, distribution and production problems at its Quest division were not
"temporary" problems or "unique" to the Naarden, The Netherlands location, but impacted company-wide operations and profitability; (b) that ICI's software, distribution and production problems at its Quest
division had not been "essentially" or "largely" "resolved" or "rectified"; and (c) that contrary to ICI's representations that it had cleared its backlog of orders and not lost any customers as a result of the software, distribution and production problems at Quest, ICI's customers were, in fact, obtaining new sources of supply and discontinuing their relationships with ICI.
The complaint further alleges that on or around March 25, 2003, before the open of trading, ICI shocked investors when it issued a profit warning with respect to its fiscal 2003 first quarter. Defendants announced that its first quarter profit would drop approximately 24%, as a result of, among other things, "business lost following the customer service problems in 2002." Following this announcement, shares of ICI fell from a close of $9.60 per share on March 24, 2003 to a close of $5.60 per share on March 25, 2003, or a single-day decline of more than 36%, on nearly twenty times normal trading volume.