By the Final Judgment and Order of Dismissal with Prejudice, signed by U.S. District Judge Sam A. Lindsey, on March 3, 2002, the Court approves the settlement and dismisses the class action with prejudice.
According to the Notice of Pendency and Proposed Settlement of Class Action dated December 12, 2002, a settlement hearing will be held on March 3, 2003, at 9:00 a.m., before the Honorable Sam A. Lindsay, United States District Judge, at the United States Courthouse, 1100 Commerce Street, Dallas, Texas (the “Settlement Hearing”). The purpose of the Settlement Hearing will be to determine: (1) whether the settlement consisting of $16 million in cash (plus accrued interest) should be approved as fair, just, reasonable and adequate to each of the parties; (2) whether the proposed plan to distribute the settlement proceeds (the “Plan of Allocation”) is fair, just, reasonable, and adequate; (3) whether Lead Plaintiffs’ counsel have adequately represented the Class; (4) whether the application by Representative Plaintiffs’ Counsel for an award of attorneys’ fees and reimbursement of expenses should be approved; and (5) whether the Litigation should be dismissed with prejudice.
As summarized by the docket posted, on February 3, 2000, the Court entered the Order signed by U.S. District Judge Joe Kendall, consolidating the cases and establishing 99-CV-2860 as the lead consolidated case. On March 28, 2000, the Court entered the Order granting the plaintiffs motion to be appointed lead plaintiff and approved lead plaintiffs’ choice of counsel. On June 12, 2000, the plaintiffs filed an Amended Complaint, and, on August 4, 2000, the defendants responded by filing a motion to dismiss the complaint. On February 1, 2001, the Court entered the Order denying the defendants’ motion to dismiss the consolidated amended class action complaint. On April 2, 2001, the plaintiffs filed a Second Consolidated Amended Class Action Complaint, and the defendants responded by filing a motion to dismiss the Second Consolidated Amended Class Action Complaint. On October 10, 2001, the Court entered the Order denying the defendants’ motion to dismiss the complaint. On November 15, 2002, a Stipulation of Settlement was filed. On December 12, 2002, the Court entered the Order signed by U.S. District Judge Sam A. Lindsay preliminarily approving the settlement and providing for notice.
The original complaint charges UICI and certain of its officers and directors
with violations of the federal securities laws by making
misrepresentations about UICI's business and earnings growth in its
CreditServ division. The complaint alleges that in order to inflate the
price of UICI's stock, the defendants caused the Company to falsely
report its results for the first, second and third quarters of 1999
through the use of unjustifiable assumptions to calculate its reserves
for credit card losses, thereby materially overstating its net income
and EPS in at least the first three quarters of 1999. On December 9,
1999, UICI's scheme unraveled as it was forced to reveal that it would
record a charge in the fourth quarter of 1999 of $79 million
attributable to increased charges to reserves for credit card losses and
a write-down of certain assets associated with its ACE Credit Card
program which began in the fourth quarter of 1998. This revelation
caused trading in UICI stock to be halted on the New York Stock Exchange
and ultimately the stock plummeted to $9-7/8 per share, a decline of 66%
from its Class Period high.