Wave Systems Corporation ("Wave" or the Company) (WAVX) is a software company.
The original Complaint alleges that Wave and individual Defendants violated the federal securities laws (sections 10(b) and 20(a) of the Securities Exchange Act of 1934) by issuing materially false and misleading public statements regarding certain software license agreements with International Business Machines, Corp. ("IBM"). Specifically, during the class period, Wave announced that it had entered into an agreement with IBM to embed Wave's software inside certain IBM notebook and desktop computers. This press release, among others during the class period, was materially false and misleading.
Several purported class action Complaints were also filed in the U.S. District Court for the District of Massachusetts.
On April 20, 2004, by Consent Decree, the case filed in the U.S. District Court for the District of New Jersey was transferred to the District Court of Massachusetts. On September 7, 2004, the Court entered the Order consolidating several cases and granted the motion to appoint lead Plaintiff and lead and liaison Counsel.
As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2006, a consolidated amended class action Complaint is pending in the United States District Court for the District of Massachusetts, naming Wave, its Chief Executive Officer and its Chief Financial Officer as Defendants. Brumbaugh et al. v. Wave Systems Corp. et al., Civ. No. 04-30022 (D. Mass.) (MAP). The purported class action has been filed by alleged purchasers of Wave’s Class A Common Stock during the purported class period July 31, 2003 through February 2, 2004. The Complaint claims that Wave and the named individuals violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10(b)-5 promulgated thereunder and Section 20(a) of the 1934 Act by publicly disseminating materially false and misleading statements, relating to Wave’s agreements with Intel and IBM. The Complaint does not specify the amount of alleged damages Plaintiffs seek to recover. Wave intends to defend the action vigorously. Recently, the Court granted in part and denied in part Defendants’ motion to dismiss. The Court dismissed two but let stand seven alleged misrepresentations or omissions. This is not a finding of fault or liability, it is a decision not entirely to dismiss Plaintiffs’ pleading.
According to a press release dated July 11, 2006, Wave announced that it has reached a settlement in principle of all claims asserted by Plaintiffs in a pending class-action securities lawsuit. The Company said in a filing with the SEC that its insurer has agreed to pay the Plaintiffs a total of $1.75 million in exchange for the dismissal with prejudice and release of the claims against all Defendants. The lawsuit, filed in the U.S. District Court for the District of Massachusetts, asserted claims arising under the Securities Exchange Act of 1934 concerning certain disclosures in 2003. The lawsuit also named Wave, its Chief Executive and its Chief Financial Officer as Defendants. In settling the suit, the Company and its management have denied all wrongdoing alleged by the Plaintiffs, the SEC filing said.
By the Order and Final Judgment issued by U.S. District Judge Michael A Ponsor on January 10, 2007, the settlement is approved as fair, reasonable and adequate, and the Complaint is dismissed with prejudice. The Plaintiffs’ Counsel is awarded 25% of the settlement fund and $55,357.65 in reimbursement of expenses.
