Plaintiffs filed a Stipulation of Settlement on February 27, 2009, outlining a $13.5 million agreement to release defendants of pending claims. According to the firms annual report for year 2008, the majority of the settlement will be funded by insurance.
The consolidated complaint, which extends the dates of the class period from the original, was filed on June 6, 2008. Defendants moved for dismissal on August 11, 2008.
On February 23, 2007, a consent motion for the extension of time to respond to complaint and a proposed Order were filed and entered. As the case continues, several motions to consolidate cases, for the appointment of lead plaintiffs and lead counsels were filed on March 19, 2007. However, on May 07, 2007, a minute Order granting the motion for extension of time to respond to complaint was entered. In addition, a proposed Order in regards to the appointment of lead plaintiffs, lead counsels and to consolidate cases was entered on June 08, 2007. As a result, on July 31, 2007 the judge entered an order consolidating all related cases and appointing United Food and Commercial Workers Union Local 880 as lead plaintiff. According to another minute Order entered on May 02, 2008, the lead plaintiffs should file a Consolidated Amended Complaint by June 06, 2008.
According to a press release dated January 16, 2007, the complaint charges Sunrise and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Sunrise provides residential and other services to retirees and elderly persons through facilities it develops and constructs and then manages, often through joint ventures.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business, its stock option plans, its compensation practices and its financial results. As a result of these false statements, Sunrise's common stock traded at artificially inflated prices during the Class Period, reaching a high of $39.68 per share on March 29, 2006. The individual defendants took advantage of Sunrise's falsified financial results, the artificial inflation of Sunrise's stock and the manipulation of its stock option plans by selling shares of their Sunrise stock for illegal insider trading proceeds of over $34 million, while Sunrise's top officers pocketed millions more in unjustified bonus payments enhanced in part by Sunrise's falsified profits. The complaint alleges that defendants had previously manipulated the Company's stock option plans so as to enrich themselves by "backdating" or "spring-loading" the stock options they were granted.
The complaint further alleges that on May 9, 2006, Sunrise disclosed a delay in reporting its first quarter 2006 results to allow a review of its financial statements, and on July 31, 2006, Sunrise revealed it would be forced to restate its financial statements going back several years - at least to 1999 - and that its prior financial statements could no longer be relied upon. Sunrise also admitted it could not file current period financial statements for the first, second and third quarters of 2006 and that when it restated its financial results, at least $100 million of previously reported profits from its joint ventures and real estate sales would be eliminated. As these revelations unfolded, Sunrise's stock fell from $39.62 on May 8, 2006 to as low as $24.40 on July 31, 2006.