According to an article dated August 20, 2007, shareholders of Veeco Instruments Inc. want a federal court to sign off on a $5.5 million class action settlement with the semiconductor maker, arguing their “sharply disputed” claims would, as it turns out, be hard to prove at trial. In a filing to the Manhattan district court Thursday, lead counsel Berger & Montague PC said an agreement had been reached to resolve the case, which accused Veeco and its top executives of a scheme to inflate the stock price by falsely recording revenues and hiding expenses. In its unopposed motion for preliminary court approval of the settlement, counsel for the lead plaintiff Steelworkers Pension Trust said the settlement, when weighed against the constraints of proving the shareholder's theory of damages, was the best outcome for the class.
On March 22, 2006, the Court entered the Order signed by U.S. District Judge Colleen McMahon granting the plaintiff’s motion to certify class and denying the defendants’ motion to dismiss the Consolidated Amended Class Action Complaint. On March 24, 2006, the Court entered the Amended Order. On April 13, 2006, the Court entered the Decision and Order denying the defendants’ motion for partial reconsideration of the Order denying the defendants' motion to dismiss.
As summarized by a law firm’s web site, additional cases were filed on behalf of investors. On April 18, 2005, motions were made to consolidate the various cases and appoint lead plaintiff and counsel. On August 22, 2005, in order to efficiently coordinate cases filed in both the Eastern District of New York and the Southern District of New York, the Judicial Panel on Multidistrict Litigation transferred all the pending cases to the Southern District of New York. On October 13, 2005, the court appointed lead plaintiff and lead counsel. On November 7, 2005, plaintiffs filed a motion for class certification, and on November 9, 2005 filed a consolidated amended class action complaint. On December 2, 2005, defendants filed a motion to dismiss.
Several class action lawsuits were filed in various U.S. District Courts charging Veeco and certain of its officers with violations of the Securities Exchange Act of 1934.
Specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that improper accounting procedures were in place at the Company's TurboDisc division; (2) that these improper accounting procedures caused the Company to materially overstate its net revenue for the first three quarters of 2004 by at least $7.5 million; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times.
The complaint further alleges that on or around February 11, 2005, before the market opened, Veeco announced that it would postpone the release of audited results for the fourth quarter and full year 2004 pending completion of an internal investigation of improper accounting transactions at its TurboDisc(R) division. News of this shocked the market. As a result, shares of Veeco fell $1.90 per share, or 10.07 percent, to close at $16.96 per share on unusually high trading volume.