According to the latest docket posted, on January 13, 2005, U.S. District Judge Saundra Brown Armstrong ordered the Lead Plaintiff's claims against the Akzo Entities dismissed with prejudice.
On January 26, 2004, the Court entered the Order granting the plaintiffs’ motion to consolidated and further granted in part and denied in part the plaintiffs’ motion to be appointed lead plaintiffs and to approve plaintiffs’ choice of counsel. On March 19, 2004, the plaintiffs filed a Consolidated Complaint and the defendants responded by filing a motion to dismiss the Consolidated Complaint. Before any ruling, the plaintiffs filed a First Consolidated Amended Complaint. On September 14, 2004, the individual defendants filed a motion to dismiss, and on October 11, 2004, Defendant Akzo Nobel filed a motion to dismiss. On January 4, 2005, the Court entered the Order granting the motion to dismiss the individual defendants.
The original complaint charges Solutia and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Solutia manufactures and markets a wide variety of high performance chemical-based materials. Solutia maintained a 50% interest in Flexsys, Nev. (a supplier of process chemicals to the rubber industry) for which Solutia used the equity method of accounting. The complaint alleges that by engaging in the alleged illegal acts, as described below, defendants were able to recognize equity interest and control over Flexsys. Solutia's equity earnings from Flexsys were as follows: $11 million in 2002, $12 million in 2001 and $12 million in 2000.
The complaint further alleges that during the Class Period, defendants caused Solutia's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements via their control over Flexsys by: (a) agreeing to charge prices at certain levels and otherwise to fix, increase, maintain or stabilize prices of rubber chemicals sold in the U.S. (b) selling rubber chemicals at the agreed upon prices; and (c) inflating their profits via the above acts.
Note: Solutia is not named as a defendant is this action because it has filed for bankruptcy pursuant to Chapter 11 of the United States Bankruptcy Code on December 17, 2003. As a result, this action is currently stayed against Solutia pursuant to 11 U.S.C. §362.