According to a law firm press release, a class action has been commenced on behalf of purchasers of MRV Communications, Inc. common stock during the period between March 31, 2003 and June 5, 2008 (the "Class Period"). The complaint charges MRV and certain of its current and former officers with violations of the Securities Exchange Act of 1934.
MRV is a supplier of communications equipment and services to carriers, governments and enterprise customers worldwide. The complaint alleges that, during the Class Period, defendants made false and misleading statements concerning the Company's employee stock option grant practices and financial results. Defendants allegedly caused or allowed MRV to issue statements that failed to disclose or misstated the following: (i) that the Company had problems with its internal controls that prevented it from issuing accurate financial reports and projections; (ii) that because of improperly recorded stock-based compensation expenses the Company's financial results violated GAAP; and (iii) that the Company's public disclosures covering a seven-year period presented an inflated view of MRV's earnings and earnings per share, which would later have to be restated.
On June 5, 2008, MRV announced that it expects to restate its 2002 to 2008 financial statements, and that its previously-issued financial statements, earnings press releases, and similar communications should no longer be relied upon. The restatement relates to the previously undisclosed stock-option backdating problems and related accounting issues. This report came after the Company had earlier announced that a review of its options granting practices had found no evidence that grant dates were designed to occur on dates with lower, more favorable exercise prices. MRV's management now states that it is likely that these previous conclusions were incorrect. Upon disclosure of this news, MRV's share price plummeted approximately 24%.
According to the Order signed by Judge Gary A. Feess on December 3, 2008, the parties’ motions to consolidate are granted. The consolidated complaint shall be styled Ramsey et al. v. MRV Communications, Inc. et al. and shall bear case number CV 08-04561 GAF (RCx). Kwok Wong’s motion for appointment as lead plaintiff are granted. Wong is appointed lead plaintiff, Labaton Sucharow LLP is appointed lead counsel, and Glancy Binkow & Goldberg LLP is appointed local liaison counsel. On January 30, 2009, the lead plaintiff filed a First Amended Complaint.
On February 10, 2009, according to an order of minutes of in chambers, Ramsey et al. v. MRV Communications, Inc. et al., bearing case number CV 08-04561 is now the operative complaint. The consolidated complaint will be treated as if it was the original complaint, and filing deadlines will be determined accordingly. The Cases of Anits et al. v. MRV Communications, Inc. et al., CV 08-04472; and Leopold et al. v. MRV Communications, Inc. et al., CV 08-05005 were ORDERED closed and no further documents are to be filed in either of these two actions.
On February 16, 2010, a Second Amended Consolidated Class Action Complaint for Violation of the Federal Securities Laws was filed by the lead plaintiffs against the defendants.
On May 17, 2010, a Preliminary Approval Order Providing for Notice and Hearing In Connection With Proposed Class Action Settlement The Court has reviewed the stipulation and found the settlement set forth therein to be fair, reasonable and adequate, subject to further consideration at the settlement hearing to be held in the future.
According to a press release dated June 11, 2010, Lead Counsel for Plaintiffs has announced, pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court, Central District of California, that the action known as Ramsey v. MRV Communications, Inc., et al., Civil Action No.CV-08-04561 GAF (Rcx), has been certified as a class action for settlement purposes only and that a settlement for $10 million has been proposed by the parties. A hearing will be held before the Honorable Gary A. Feess in Room
740 of the Roybal Federal Building, the United States District Court for the Central District of California, 255 East Temple Street, Los Angeles, CA 90012, at 9:30 a.m. on November 15, 2010 to determine: whether the proposed settlement should be approved by the Court as fair, reasonable and adequate; whether the Settlement Class should be certified and a class representative and class counsel be appointed; whether the proposed Plan of Allocation for distribution of the Settlement proceeds should be approved; to consider the request of Lead Counsel for attorneys' fees and reimbursement of litigation expenses; and to consider Lead Plaintiff's application, if any, for his reasonable costs and expenses (including lost wages) relating to his representation of the Settlement Class. The Court may change the date of the hearing without providing another notice.