The action seeks to pursue remedies under the Securities Act of 1933 and the Securities Exchange Act of 1934. Specifically, the complaint alleges that Defendants issued materially false and misleading statements about its financial condition prior to and following its formation in early 2007 through the date of the merger of Stratex Networks, Inc. and the Harris Microwave Communications Division.
On July 30, 2008, the Company announced that it had discovered accounting errors which rendered its previously issued financial statements to be incorrect. According to the announcement, the Company will restate earnings reports from 2005 through the present. The Company reported these accounting errors will cut previously reported pre-tax income by $18 million to $25 million. As a result of the restatement, the Company announced that its prior financial statements for the first three quarters of fiscal 2008 and the fiscal years 2005 through 2007 should no longer be relied upon. Harris Stratex's share price fell in reaction to the announcement, falling from $11.24 to $7.35 per share -- a 34.61% decline in value.
On December 4, 2008, the plaintiff in the first filed complaint filed a Notice of Voluntary Dismissal. The case is continuing in two actions substantially similar to this action, captioned Dutton v. Harris Stratex Networks, Inc., 08-CV-00755 (D. Del. filed Oct. 6, 2008) and Kleinmann v. Harris Stratex Networks, Inc., 08 Civ. 6171 (D. Del. filed Oct. 30, 2008).
On June 5, 2009, Judge Joseph J. Farnan, Jr. granted the motion to consolidate the two actions under Civil Action No. 08-755-JJF. The Rudman Investors’ motion to be appointed lead plaintiff was granted. Kirby McInerney, LLP, was approved as lead counsel. On July 29, 2009, the lead plaintiff filed a Consolidated Class Action Complaint. On September 28 and October 9, 2009, the defendants responded by filing several motions to dismiss the Consolidated Class Action Complaint.
On July 27, 2010, the Court entered the Order signed by Joseph J. Farnan, Jr. granting the motion to dismiss the Consolidated Class Action Complaint. According to the Order, the Motion To Dismiss The Consolidated Class Action Complaint (D.I. 56) filed by Defendant Ernst & Young is granted; the Motion To Dismiss (D.I. 60) filed by Defendant Harris Corporation is denied; and the Motion To Dismiss (D.I. 61) filed by Defendants Harris Stratex Networks, Inc., and the individual defendants is granted as it relates to a Section 10(b)(5) claim based on the January 30, 2008 statements and denied in all other respects.
On December 10, 2010, the plaintiffs filed a motion to certify the class. On June 1, 2011, a Motion for Preliminary Approval of the Settlement was filed. According to the Stipulation of Settlement, the proposed settlement will settle claims with the company and individual defendants. The settlement fund is in the amount of $8.9 million in cash. The settlement was preliminarily approved on June 21, 2011. The Settlement Fairness Hearing was set for September 16, 2011.
The settlement was approved by the Final Judgement and Order of Dismissal with Prejudice entered on October 11, 2011. Attorneys' fees and expenses were awarded in the amount of 25% of the settlement fund and $147,160.34, respectively. The plan of allocation was also approved. The case is now closed.