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. Throughout the Class Period, as alleged in the complaint, defendants issued numerous positive statements concerning the growth and financial performance of its transportation subsidiary. 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 the Company had failed to recognize costs incurred in a rolling-stock supply railcar contract at its transportation unit in anticipation of shifting the costs to other contracts; (b) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (c) as a result of the foregoing, the value of the Company's losses was materially understated at all relevant times and the value of the Company's margins was materially overstated at all relevant times. On June 30, 2003, before the U.S. market opened for trading, Alstom announced that it is "conducting an internal review assisted by external accountants and lawyers following receipt of letters earlier this month alleging accounting improprieties on a railcar contract being executed at the Hornell, New York facility of ALSTOM Transportation Inc. (ATI), a US subsidiary of the Company." As part of the review, the Company "identified that losses have been significantly understated in ATI's accounts, in substantial part due to accounting improprieties by the understatement of actual costs incurred, including by the non-recognition of costs incurred in anticipation of shifting them to other contracts, and by the understatement of forecast costs to completion." As a result, the Company announced that it would record an additional net after tax charge of 51 million euros ($58 million) for the year ended 31 March 2003.
As summarized by the Co-Lead counsel’s website, on January 7, 2004, the Honorable Victor Marrero entered an Order appointing Co-Lead Plaintiffs and Co-Lead Counsel for the Class in this action. Lead Plaintiffs filed their Consolidated Amended Complaint on June 18, 2004. Defendants moved to dismiss the case, and Lead Plaintiffs opposed the motions to dismiss. On December 22, 2005, Judge Marrero issued three Opinions resolving the motions and allowing Lead Plaintiffs to continue to prosecute the case towards trial. Judge Marrero held that the Consolidated Amended Complaint adequately alleges claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against Alstom, former Alstom Chairman and CEO, and former Alstom Chief Financial Officer relating to the undisclosed guarantees of cruise ship purchasers’ loans, and against Alstom Transportation, Inc. (ATI) relating to the understatement of ATI’s costs. Judge Marrero dismissed certain other claims, including claims under the Securities Act of 1933 relating to Alstom’s February 2001 secondary offering of common stock, based on statute of limitations and other defenses. The Court also ruled that both purchasers of Alstom securities on U.S. exchanges and non-U.S. purchasers of Alstom securities on non-U.S. exchanges may be included in the Plaintiff Class for the claims relating to the ATI fraud, but only purchasers of Alstom securities on U.S. exchanges may be included in the Plaintiff Class for the claims relating to the undisclosed guarantees of cruise ship purchasers’ loans. Lead Plaintiffs took limited discovery relating to the ATI fraud, as ordered in the Court's December 22, 2005 Opinions, and filed a motion for leave to file a Second Consolidated Amended Complaint incorporating information from the limited discovery on February 24, 2006. Judge Marrero granted Lead Plaintiffs' motion for leave to amend on March 10, 2006. Certain defendants moved to dismiss the amended claims against them in the Second Consolidated Amended Complaint, and Lead Plaintiffs have filed a brief opposing the motions to dismiss.
On September 29, 2006, the Court issued the Decision and Order signed by U.S. District Judge Victor Marrero denying several motions to dismiss the Second Consolidated Amended Complaint. On October 5, 2006, the Court issued the Order granting the motion by certain defendants to dismiss claims asserted as to them in the Second Consolidated Amended Complaint.
According to a press release dated September 9, 2008, Judge Victor Marrero of the U.S. District Court for the Southern District of New York ruled that an investor class action lawsuit alleging securities fraud can go forward against Alstom SA and two former executives.
On September 14, 2010, the Court entered the Decision and Order signed by Judge Victor Marrero, dismissing the claims of Plaintiffs who purchased securities on foreign exchanges.
On November 30, 2010, Judge Marrero granted the defendants motion to dismiss Lead Plaintiffs State Universities Retirement System of Illinois, Louisiana State Employees' Retirement System and West Virginia Investment Management. On December 22, 2010, the defendant filed three motions for summary judgment.
On May 9, 2011, the plaintiffs filed a motion for preliminary approval of settlement. According to the Settlement Agreement, the settlement amount is $6,950,000 in cash. The motion was preliminarily approved on May 27, 2011. The final settlement hearing was set for October 21, 2011.
On October 21, 2011, Judge Victor Marrero approved the settlement and the plan of allocation, and awarded expenses. The action is now dismissed with prejudice.