According to the Order and Final Judgment, entered on December 1, 2005, from U.S. District Judge Honorable Marianne O. Battani of the U.S. District Court for the Eastern District of Michigan, the case is settled. The action is dismissed with prejudice and without costs, except as provided in the Stipulation. Further, the Plan of Allocation is approved, and Plaintiffs’ Counsel are awarded 27% of the Gross Settlement Fund in fees, and $266,824.13 in reimbursement of expenses.
By the Notice of Settlement, the settlement in In re Comerica Inc. Securities Litigation, Case No. 02-CV-60233 will provide a $15.0 million settlement fund for the benefit of investors who purchased or otherwise acquired Comerica common stock between July 17, 2002 and October 1, 2002, inclusive. The Court will hold a Final Settlement Hearing on Monday, October 24, 2005. At this hearing the Court will consider whether the settlement is fair, reasonable and adequate. At the Final Settlement Hearing, the Court also will consider the proposed Plan of Allocation for the proceeds of the Settlement and the application of Plaintiffs’ Lead Counsel for attorneys’ fees and reimbursement of expenses.
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, by issuing a series of material misrepresentations to the market between July 17, 2002 and October 1, 2002, thereby artificially inflating the price of Comerica defendants issued statements regarding the Company's financial performance and filed a quarterly report with the SEC which described the Company's increasing revenues and financial performance. These statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had materially overstated its net income by approximately $23 million in the second quarter of 2002; (ii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iii) 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 October 2, 2002, before the market opened for trading, the Company issued a press release announcing that it will record a $328 million charge "related to an incremental provision for credit losses and goodwill impairment for the company's Munder Capital Management subsidiary." As a result, the Company will be restating its second quarter earnings to $161 million, compared to previously-reported earnings of $184 million. The Company further reported that the additional provision and charge-offs related to the second quarter "were determined during a recent subsidiary regulatory examination." Following this report, shares of Comerica fell $10.19 per share, or $20.3%, to close at $40 per share, on volume of more than 10.855 million shares traded, or more than ten times the average daily volume.