According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2008, the settlement agreement received final approval by the Court at a hearing on June 3, 2008 and a Final Judgment and Order dismissing the action with prejudice was docketed on June 4, 2008. Under the terms of the settlement agreement, the plaintiff class will receive a payment of $10,500,000 less approved attorneys fees and expenses, which has been funded to an escrow account by the Company’s insurance carrier.
As summarized by the same SEC filing, since the initial lawsuit, other suits containing substantially similar allegations and with similar, but not exactly the same, class periods were filed. On July 5, 2006, a single Consolidated Amended Complaint was filed in the Welmon action in the Southern District of New York consolidating all previously filed actions. The company and the individual defendants filed a motion to dismiss the Complaint, which was denied by the Court. On March 2, 2007, the lead plaintiffs filed a motion for class certification, and the Company and the individual defendants filed an opposition to class certification on April 2, 2007. After an initial hearing on the motion for class certification held on May 29, 2007, the Court scheduled another hearing to be held on November 13-14, 2007, to resolve factual issues regarding the typicality and adequacy of the proposed class representatives. The parties agreed to a rescheduling of the hearing to a later date. On January 22, 2008, the parties entered into a definitive settlement agreement that, without any admission of liability, would fully resolve the claims made against the Company and the individual defendants in this litigation.
The original Complaint alleges that defendants Chicago Bridge and certain of its officers and directors violated federal securities laws by issuing a series of materially false statement. Specifically defendants failed to disclose the following adverse facts: (i) that the Company was materially overstating its financial results by failing to properly utilize percentage-of-completion accounting; and (ii) that the Company was not following its publicly stated revenue recognition policies.
The complaint alleges that on or around October 26, 2005, Chicago Bridge announced that it would be delaying the release of its third quarter financial results because they were not finalized as scheduled. On October 31, 2005, Chicago Bridge issued a press release announcing that the delay in its release of financial results was "precipitated by a memo from a senior member of CB&I's accounting department alleging accounting improprieties, including the determination of claim recognition on two projects and the assessment of costs to complete two projects."
The complaint further alleges that on or around February 3, 2006, after the close of the market, Chicago Bridge announced the terminations of Defendants the Chairman, President and CEO of Chicago Bridge and Chicago Bridge’s Executive Vice Officer and COO. Two hours after the announcement, an attorney representing Defendants, the Company’s CEO and COO, issued a press release representing that they had been terminated in connection with the Company's internal accounting investigation. On the next trading day, the price of Chicago Bridge stock dropped from $29.00 to $22.33 per share.
On September 18, 2009, the Court issued an Order Re: Distribution Of Class Settlement Fund.