According to a press release dated August 22, 2007, the complaint alleges that Defendants Semtech and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by artificially inflating Semtech's previously reported financial results through an improper stock option backdating scheme that was perpetrated at the highest levels of the Company. Defendants carried out this scheme by intentionally manipulating the grant dates of stock options awarded to themselves and other officers and directors of the Company and selecting grant dates at which Semtech stock traded at much lower prices than the actual grant dates. In public disclosures, however, Defendants falsely claimed that the grants were dated and priced as of the date of the actual grants.
The complaint further alleges that on July 20, 2006, Semtech revealed that it expected to record material amounts of additional compensation expense and that it expected to restate its financial results from fiscal 2002 through 2006, while it also disclosed that its prior financial statements should not be relied upon. Semtech's share price fell in reaction to this announcement, falling from $13.19 to $12.37 per share. Semtech shares continued to fall in reaction to the news on July 21, 2006, closing at $11.60 per share.
On October 15, 2007, the Judge Denny Chin issued the Order to transfer the case from the U.S. District Court for the Southern District of New York to Central District of California. On October 22, 2007, the case was transferred out.
On March 31, 2008, Judge Christina A. Snyder signed the Order to appoint lead plaintiff and lead counsel. According to the Order, the Court appoints Class member the Mississippi Public Employees' Retirement System to serve as Lead Plaintiff in the consolidated action. In addition, Cauley Bowman Carney & Williams, PLLC, and Baron & Budd, P.C. are approved as Co-Lead Counsel.
According to a press release dated October 13, 2008, the U.S. District Court for the Central District of California granted a motion that sought the consolidation of two purported securities fraud class-action lawsuits against Semtech Corp. The plaintiffs demand a jury trial but make no specific monetary demand. A very similar lawsuit was filed in October 2007 by another plaintiff, which suit has not been served to the company. In February 2008, MPERS filed a motion with the U.S. District Court for the Central District of California for consolidation of the cases, appointment of MPERS as lead plaintiff, and approval of selection of counsel. The MPERS motion was granted in late March 2008, according to the company's Sept. 4, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended July 27, 2008.
As summarized by the Company's FORM 10-K For the fiscal year ended January 25, 2009, a Consolidated Amended Class Action Complaint was filed in May 2008, initiating the consolidated action with MPERS as the lead plaintiff. Most recently, motions to dismiss and for other remedial actions filed by the defendants were heard by the Court on December 15, 2008. The Court granted motions to dismiss in favor of defendants former Chief Executive Officer of the Company and current Chief Executive Officer of the Company regarding claims under Section 10(b) of the Securities Exchange Act of 1934. The Court denied all other motions of all defendants, including other motions to dismiss brought in relation to alternate allegations raised against the former and current CEO who remain pending as defendants in the matter.
The parties are currently engaged in discovery proceedings.
On March 7, 2011, a Stipulation and Agreement of Settlement was submitted by the parties to the Court.
On April 11, 2011, an Order Preliminarily Approving Class Action Settlement and Providing for Notice was issued by the Court.
On June 26, 2011, the Court issued a Final Order approving the Settlement and awarding Attorneys' Fees.