According to a press release May 2, 2007, on April 13, 2007, the U.S. District Court for the Western District of North Carolina entered an Order and Final Judgment in each of the securities class action and the tag-along ERISA class action, approving the settlement of each case and dismissing the settled claims with prejudice.
In a press release dated January 9, 2007, SPX Corp. plans to settle shareholder lawsuits alleging the Charlotte manufacturer and former Chief Executive misled investors to inflate the value of its stock.SPX admits no wrongdoing in the proposed settlements , set for a federal court hearing April 10. The Fortune 500 company would pay $10 million to settle what began as seven class-action lawsuits, the first filed nearly three years ago. The settlement covers shareholders who bought stock from Nov. 5, 2003, to Feb. 26, 2004. SPX also agreed to pay $3.6 million for a lawsuit on behalf of employees in a retirement and stock ownership plan, according to documents filed last month in U.S. District Court in Charlotte.
In a press release dated November 1, 2006, on October 9, 2006, the company reached an agreement in principle to settle its outstanding Securities Class Action and related ERISA litigation. The settlement is subject to court approval, and the parties are in the process of drafting the requisite documents and taking the necessary actions to secure that approval. The approval process may take several additional months to complete. Under the terms of the pending settlement, both actions will be dismissed with prejudice and the company's aggregate net settlement payment, after insurance reimbursements, will be $5.1 million. The company recorded a charge of $4.1 million in the third quarter of 2006 related to this pending settlement.
As reported by the Company’s FORM 10-Q for the quarterly period ended September 30, 2005, beginning in March 2004, multiple class action complaints seeking unspecified monetary damages were filed or announced by certain law firms representing or seeking to represent purchasers of the Company's common stock during a specified period against the Company and certain of its current and former executive officers in the United States District Court for the Western District of North Carolina alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The plaintiffs generally allege that the Company made false and misleading statements regarding the forecast of the Company's 2003 fiscal year business and operating results in order to artificially inflate the price of the Company’s stock. These complaints have been consolidated into a single amended complaint against the Company and its former Chairman, CEO and President. On September 20, 2004, the Company filed a motion to dismiss the consolidated action in its entirety. That motion is fully briefed for ruling by the District Court.
The original complaint alleges that defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Throughout the Class Period, defendants issued false and misleading projections of the Company's fiscal year 2003 earnings per share. Defendants emphasized increased free cash flow and earnings per share throughout the Class Period. Defendants failed to disclose that these results were only made possible through a last minute one-time gain resulting from a legal settlement, and were not reflective of the deteriorating underlying business operations of the Company. As a result, defendants' Class Period statements were materially false and misleading as to the profitability of its current organic operations and the Company's future earnings. SPX stock plummeted 21%, on usually high trading volume of 16 million shares, from its February 26, 2004 close of $53.30 per share to a close of $42.00 on February 27, 2004.
The complaint also alleges that throughout the Class Period, defendants issued public statements assuring investors that SPX was on track to meet its earnings per share projections, when in fact, defendants knew the Company's financial growth had materially declined. While the investing public was shielded from the truth of the Company's poor earnings prospects, in January and February 2004 Defendant and CEO Blystone sold significant portions of his own SPX holdings, amounting to over $41 million in SPX stock. On February 27, 2004 defendants filed the 2003 Form 10-K with the SEC, revealing the true financial condition of SPX, and that the Company was only able to meet its EPS projections through inclusion of a one-time gain.