The class action was commenced on behalf of an institutional investor and purchasers of Vodafone Group Public Limited Company publicly traded securities, including common/ordinary stock and American Depositary Receipts (“ADRs”).
The complaint charges Vodafone and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Vodafone is one of the world’s largest providers of mobile telephone services, with worldwide operations in 28 countries, including in the United States, Germany, Italy and Japan.
The complaint alleges that defendants’ statements regarding Vodafone’s business and prospects issued during the Class Period were false and misleading in failing to disclose the following true facts: (a) throughout the Class Period, Vodafone’s financial statements and reports were materially falsified and overstated, including the overstatement of its assets and operating earnings due to the over-valuation of its German, Italian and Japanese operations; (b) Vodafone’s German operations had not been successfully integrated into Vodafone’s overall operations and were suffering from significant operational problems, inefficiencies and a lack of growth and profitability adequate to permit Vodafone to recover its investment in its German operations; (c) Vodafone’s Japanese operations were materially overvalued on Vodafone’s financial statements due to the failure to hold or gain sufficient market share so as to permit Vodafone to recover its investment in its Japanese operations; (d) Vodafone’s “One Vodafone” cost savings and operational efficiency initiative was not succeeding or achieving any significant cost savings; and (e) due to the foregoing adverse factors which were negatively impacting Vodafone’s operations and financial performance, defendants knew that the levels of financial performance being forecast for Vodafone for fiscal 2006 and 2007 would not and could not be achieved.
According to the Company’s Form 20-F for the fiscal year ended: March 31, 2009, on 12 November 2007, the Company became aware of the filing of a purported class action complaint in the United States District Court for the Southern District of New York by The City of Edinburgh Council on behalf of the Lothian Pension Fund (‘Lothian’) against the Company and certain of the Company’s current and former officers and directors for alleged violations of US federal securities laws. The complaint alleged that the Company’s financial statements and certain disclosures between 10 June 2004 and 27 February 2006 were materially false and misleading, among other things, as a result of the Company’s alleged failure to report on a timely basis a write-down for the impaired value of Vodafone’s German, Italian and Japanese subsidiaries. The complaint seeks compensatory damages of an unspecified amount and other relief on behalf of a putative class comprised of all persons who purchased publicly traded securities, including ordinary shares and American depositary receipts, of the Company between 10 June 2004 and 27 February 2006. The plaintiff subsequently served the complaint and, on or about 27 March 2008, the plaintiff filed an amended complaint, asserting substantially the same claims against the same defendants on behalf of the same putative investor class. Thereafter, an additional plaintiff, a US pension fund that purportedly purchased Vodafone ADRs on the New York Stock Exchange, was added as an additional plaintiff by stipulated order. The Company believes that the allegations are without merit and filed a motion to dismiss the amended complaint on 6 June 2008. By judgment entered on 1 December 2008, the court dismissed the amended complaint for lack of subject matter jurisdiction. The plaintiffs subsequently filed a motion for reconsideration of that dismissal, arguing that the court overlooked the claims of the US pension fund, as to which there had been no subject matter jurisdiction challenge. On 9 April 2009, the court granted that motion to the extent that it sought reopening of the action for the purpose of adjudication of the claims asserted on behalf of the US pension fund, but denied the motion with respect to the dismissal of Lothian’s claims. The court ordered the case re-opened pending consideration and order with respect to other arguments of the Company in its motion to dismiss in connection with which the court also indicated it will address any arguments regarding supplemental jurisdiction over Lothian’s claims. The Company is awaiting the Court’s further consideration and order.
On June 26, 2010, the plaintiff filed a motion for leave to file a Second Amended Complaint. On January 22, 2010, Judge P. Kevin Castel denied the plaintiff’s motion. On January 30, 2010, the Clerk’s Judgment was entered and the action is now dismissed.