According to a press release dated March 12, 2009, the complaint alleges that defendants consummated the Offering pursuant to the false and misleading Registration Statement, selling 36.8 million shares of the Securities at $25 per share, for proceeds of over $920 million. The Registration Statement incorporated Prudential’s financial results for 2007 and the first quarter of 2008. Prudential ultimately announced huge writedowns associated with its exposure to subprime mortgages and the goodwill on the Company’s books associated with certain of its subsidiaries, causing the price of the Securities to decline.
According to the complaint, the true facts which were omitted from the Registration Statement were: (a) the Company’s asset-backed securities collateralized with subprime mortgages were impaired to a greater extent than the Company had disclosed; (b) the Company’s goodwill associated with certain of its subsidiaries was impaired to a greater extent than the Company had disclosed; (c) defendants failed to properly record losses for impaired assets; and (d) the Company’s internal controls were inadequate to prevent the Company from improperly reporting its impaired assets.
On May 22, 2009, Judge Jose L. Linares granted the motion to consolidate the actions, appointed Paul J. Perry as Lead Plaintiff and appointed the law firm of Izard Nobel LLP as Lead Counsel and Lite DePalma Greenberg & Rivas, LLC as Liaison Counsel. On July 21, 2009 the lead plaintiff filed a Consolidated Class Action Complaint. On September 21, 2009, the defendants filed two motions to dismiss the Consolidated Class Action Complaint. On September 29, 2009, the defendants' motions to dismiss were administratively terminated. On January 26, 2010, the defendants re-filed two motions to dismiss the Consolidated Class Action Complaint. On June 29, 2010, Judge Jose L. Linares granted in part and denied in part the defendants’ motion to dismiss. Plaintiffs may file an amended complaint within 20 days of the order.
On July 29, 2010, the plaintiffs filed a Amended Consolidated Class Action Complaint. The defendants filed two motions to dismiss on November 17, 2010. On June 1, 2011, Judge Jose L. Linares signed Stipulation and Order withdrawing the pending motions to dismiss. The parties engaged in settlement negotiations.
On August 4, 2011, a motion for preliminary approval of settlement was filed. The proposed settlement is in the amount of $16.5 million in cash. The settlement was preliminarily approved the next day. The final settlement hearing was set for November 14, 2011. On November 29, 2011, Judge Jose L. Linares signed the Final Judgment and Order approving the settlement and dismissing the action with prejudice. The civil case is now terminated. Judge Linares also awarded attorneys' fees and reimbursement of costs & expenses.