A press release dated Ocober 07, 2008, stated that Monster Worldwide, Inc. (NASDAQ: MNST) announced today further progress in finalizing two settlements, which were previously announced and disclosed in the Company’s Form 8-K filed on July 31, 2008. The Supreme Court of the State of New York, New York County, has issued an order granting final approval of the settlement of the state and federal court derivative lawsuits arising out of the Company’s historic stock option grant practices. In addition, the United States District Court for the Southern District of New York has granted preliminary approval of the previously announced settlement of the shareholder class action arising out of those practices. A hearing with respect to final approval of the settlement of the federal shareholder class action is scheduled for November 21, 2008.
According to a press release dated July 31, 2008, Labaton Sucharow LLP, who are representing the court-appointed Class Representative Middlesex County Retirement System, announced that it has entered into a memorandum of understanding ("MOU") to settle In re Monster Worldwide, Inc. Securities Litigation for $47.5 million. The proposed settlement, if approved by U.S. District Judge Jed S. Rakoff of the Southern District of New York, will be one of the top five largest options backdating class action settlements in history. The settlement also requires Monster's founder and former Chief Executive Officer Andrew McKelvey to personally pay $550,000 toward the settlement.
On January 02, 2008, an Order on the adoption of the formal Case Management Plan was entered. As a result, according to the Civil Case Management Plan, this case should be ready for trial on July 30, 2008. The case proceeds with a motion for summary judgment filed on February 14, 2008. At the same time, a rule 56.1 statement, a memorandum of law and a declaration by two individuals in support of motion for summary judgment were also filed by the plaintiffs. Just as quickly, a Notice of Motion to certify class was filed on February 15, 2008. On March 05, 2008, a memorandum of Order was entered on the denial of an individuals’ motion to dismiss in its entirety. After several memorandums, declarations and responses in reply to motion for summary judgment as well as counterstatements to rule 56.1 and a motion to intervene Notice of Motion was filed on April 22, 2008. Hence, a memorandum Order was finally entered on April 30, 2008 and granted only plaintiffs’ motion for partial summary judgment, but denied all other parts of the motion. In addition, an Order granting the government’s request for stay until May 22, 2008 and on the no opposition to intervene motion was also entered on May 07, 2008. Lastly, an Order granting the Government’s request to extend time was entered on May 22, 2008.
According to an article dated November 16, 2007, a judge has decided to keep alive a class action lawsuit against the former chief executive officer and founder of Monster Worldwide, Inc. alleging he was involved in a scheme to illegally backdate stock options. In an order signed Wednesday and filed Thursday, Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York ruled that the case against a certain individual should proceed. This stated that he would explain his reasoning in a memorandum to be filed later. However, defendant Monster and the former general counsel were also named in the suit, but were not involved in the motion to dismiss.
On June 19, 2007, the Court entered the Order appointing the Middlesex County Retirement System and the Steamship Trade Association - International Longshoremen's Assoc. Pension Fund as lead Plaintiffs in this action and the law firm of Labaton Sucharaow & Rudoff LLP as Lead Counsel. The Court further consolidated all related actions under Master File Civil Action No. 1:07-cv-2237, In Re: Monster Worldwide, Inc., Securities Litgation. On July 9, 2007, an Amended Class Action Complaint was filed. A motion to dismiss the Amended Complaint has been filed.
The original complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder. Specifically, the complaint alleges that Defendants engaged in a fraudulent scheme and or published a series of materially false and misleading statements that Defendants knew, and or were severely reckless in not knowing, were materially false and misleading, and failed to disclose material information necessary to render such statements not false and misleading. During the Class Period, Defendants granted stock options to themselves and to other Monster officers and directors on dates that Monster stock had reached its lowest, or next-lowest price in weeks or months. These grants almost invariably preceded share gains, and or followed significant drops in the Company's stock price. In public disclosures, however, Defendants falsely claimed that the grants were dated and priced as of the date of the actual grants.
On June 12, 2006, The Wall Street Journal published an article titled "Monster Worldwide Gave Officials Options Ahead of Share Run-Ups." The article stated that Monster may have backdated option grants, and reported that there was a one in nine million chance that the grant dates of the options The Wall Street Journal examined were selected at random. That same day, Monster issued a press release announcing the receipt of a subpoena from the U.S. Attorney for the Southern District of New York, relating to the Company's stock option granting practices. Shares of Monster reacted negatively to the news, closing at $38.60, down $3.40 from the prior trading day, a one day drop of 8.1%, on unusually heavy volume.
Subsequently, Defendant Myron Olesnyckyj has pleaded guilty to criminal federal securities fraud and conspiracy to commit securities fraud.