On November 15, 2007, the settlement hearing was held and the settlement was approved. That day, the Court entered the Judgment and the case is now closed.
According to a press release dated August 8, 2007, Corn Products International Inc. said Wednesday it has agreed to pay $6.6 million to settle claims that it made false statements regarding its 2005 financial forecast. The agreement, which was preliminarily approved by the U.S. District Court for the Northern District of Illinois in June, settles a consolidated class action lawsuit in which shareholders accused the corn refiner of violating federal securities laws. Any purchasers of Corn Products securities between Jan. 25, 2005 and April 4, 2005 are eligible to claim a piece of the settlement, which will also cover attorneys' fees. A hearing is scheduled in the Illinois federal court in November to finalize the agreement.
On June 14, 2006, the Court entered the Memorandum Opinion and Order signed by U.S. District Judge James B. Zagel denying the defendants’ motion to dismiss the Consolidated Class Action Amended Complaint. On October 11, 2006, the plaintiffs filed a motion to certify the class.
As disclosed by the Company’s FORM 10-K for the fiscal year ended December 31, 2005, between May and June of 2005, the Company, Samuel Scott and Cheryl Beebe were named as defendants in five purported securities class action suits filed in the United States District Court for the Northern District of Illinois. The complaints alleged violations of certain federal securities laws and sought unspecified damages on behalf of a purported class of purchasers of the Company’s common stock between January 25, 2005 and April 4, 2005. In August 2005, all of these class actions were consolidated in the matter of Monty Blatt v. Corn Products International, Inc. (N.D. Ill. 05 C 3033). In November 2005, plaintiffs filed a consolidated amended complaint containing essentially the same legal claims. Cheryl Beebe was not named as a defendant in the consolidated amended complaint.
The original complaint charges Corn Products and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Corn Products manufactures and sells starches, liquid sweeteners and other ingredients to food and industrial customers in over 60 industries around the world.
Specifically, the Complaint alleges that, during the Class Period, defendants issued materially false and misleading statements concerning the Company's future prospects. Specifically, the complaint alleges that these statements were materially false and misleading because, at the time that these statements were made, defendants knew, but failed to disclose and/or misrepresented: (i) that the Company was experiencing manufacturing problems at certain of its facilities that were causing its expenses to rise dramatically above internally forecasted levels. These problems caused certain of the Company's processing facilities to close and/or slowdown production thereby raising expenses; (ii) that the Company had contracted for corn in Canada in the late Fall of 2004 at prices higher than present prevailing prices, thereby forcing the Company to purchase corn at above-market prices and further eroding the Company's profit margins. In other words, the Company's hedging strategy related to its Canadian corn purchases was then negatively impacting its financial results and would continue to do so for the next year; and (iii) given the foregoing, Defendants lacked a reasonable basis for their positive statements concerning the Company and its earnings and prospects.
The complaint further alleges that on or around April 5, 2005, before the market opened, Corn Products issued a press release announcing that it expected first quarter earnings to decline by 35 to 40 percent from the first quarter of 2004, due primarily to the timing of corn purchases, increased expenses, and manufacturing expense problems. In response to this announcement, the price of Corn Products common stock declined precipitously, falling from $25.86 per share to $20.98 per share, on extremely heavy trading volume.