The original class action complaint charges TeleTech and certain of the Company's officers and directors with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934 (the ``Exchange Act''). In addition, defendants and its underwriters for the Company's March 30, 2007 Secondary Offering are charged with issuing a materially false and misleading Registration Statement and joint Proxy-Prospectus in violation of the Securities Act of 1933 (the ``Securities Act'').
On November 8, 2007, defendants shocked investors by announcing that TeleTech was conducting a ``review of equity-based compensation practices and likely restatement of previous issued financial statements'' would be required -- possibly as far back as 1999. At that time, investors learned that TeleTech would likely be forced to take millions of dollars in charges and reserves, and that the Company would be forced to restate almost a full decade of financial results to account for the Company's true employment costs, expenses, reserves, payroll taxes, fines and penalties.
Following this news, on November 9, 2007, shares of TeleTech fell from a prior day's closing price of $22.61 per share, to an intra-day and 52-week trading low of $18.76 per share -- an immediate decline of over 17%. That day, over 4.13 million shares traded as TeleTech shares fell to a mere half of the $36.50 price at which defendant Kenneth Tuchman liquidated almost $210 million of his personally held TeleTech shares at the end of March 2007.
According to the Company’s Form 10-Q for the quarterly period ended September 30, 2009, on January 25, 2008, a class action lawsuit was filed in the United States District Court for the Southern District of New York entitled Beasley v. TeleTech Holdings, Inc., et al. against TeleTech, certain current directors and officers and others alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder and Section 20(a) of the Securities Exchange Act. The complaint alleges, among other things, false and misleading statements in the Registration Statement and Prospectus in connection with (i) a March 2007 secondary offering of common stock and (ii) various disclosures made and periodic reports filed by the Company between February 8, 2007 and November 8, 2007. On February 25, 2008, a second nearly identical class action complaint, entitled Brown v. TeleTech Holdings, Inc., et al., was filed in the same court. On May 19, 2008, the actions described above were consolidated under the caption In re: TeleTech Litigation and lead plaintiff and lead counsel were approved. On October 21, 2009, the Company and the other defendants named executed a stipulation of settlement with the lead plaintiffs to settle the consolidated class action lawsuit. The settlement is subject to various conditions including preliminary approval by the United States District Court for the Southern District of New York, notice to class members, a final hearing and final approval by the District Court. The total settlement amount to be paid under the stipulation of settlement will be covered by the Company’s insurance carriers.
The Stipulation of Settlement dated October 21, 2009 was made and entered into by and among the following Settling Parties to the above-entitled Litigation: (i) the Lead Plaintiff, Electrical Workers Local No. 357 Pension and Health & Welfare Trusts ("Electrical Workers Local No. 357") (on behalf of itself and each of the Class Members), by and through its counsel of record in the Litigation; (ii) TeleTech Holdings, Inc. ("TeleTech" or the "Company"), Kenneth D. Tuchman, John R. Troka, James E. Barlett, Ruth C. Lipper, William A. Linnenbringer, Shrikant Mehta, and Shirley Young (collectively, "TeleTech Defendants"); (iii) Citigroup Global Markets, Inc. ("Citigroup") and Morgan Stanley & Co. Inc. ("Morgan Stanley"); and (iv) Ernst & Young LLP ("EY") (collectively, the TeleTech Defendants, Citigroup, Morgan Stanley, and EY are referred to as the "Defendants"), by and through their counsel of record in the Litigation. The Stipulation is intended by the Settling Parties to fully, finally, and forever resolve, discharge, and settle the Released Claims, upon and subject to the terms and conditions hereof
On January 22, 2010, Judge Laura Taylor Swain preliminarily approved the proposed $11 million settlement. The Final Approval Hearing is set for June 11, 2010.
On June 11, 2010, an Order Awarding Lead Counsel's Attorneys' Fees and Expenses along with an Order and Final Judgment of Dismissal with Prejudice, and an Order Approving Plan of Allocation of Settlement Proceeds were issued by the Court.