According to a press release dated March 15, 2011, the complaint charges Finisar and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Finisar is a provider of optical subsystems and components that connect short-distance local area networks, storage area networks, longer distance metropolitan area networks, fiber-to-the-home networks, cable television networks and wide area networks.
Specifically, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Specifically, defendants failed to disclose that Finisar’s recent revenue growth was due to an oversupply of inventory in the market and that the Company would be unable to sustain its strong growth due to increased pricing pressures and a slowdown in business from China. As a result of defendants’ false statements, Finisar’s stock traded at artificially inflated prices during the Class Period, reaching a high of $43.23 per share on February 14, 2011.
Then, on March 8, 2011, after the market closed, Finisar issued a press release announcing its third quarter fiscal year 2011 results. The Company reported earnings of $18.8 million, or $0.22 diluted earnings per share, and revenue of $263.0 million. The Company further reported its fourth quarter 2011 revenues would be in the range of $235 to $250 million, lower than analysts’ estimates. On this news, Finisar’s stock fell $15.43 per share to close at $24.61 per share on March 9, 2011, a one-day decline of nearly 39%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) Finisar’s recent revenue surge was not due solely to organic growth from real end-market demand, but rather it was partially due to an inventory build by the Company’s customers; (b) Finisar was experiencing increasing pricing pressures due to intense competition in the industry and, as a result, it was forced to concede to steep discounts in order to retain certain of its customers; (c) Finisar was experiencing a serious slowdown in business from China, which would have a detrimental effect on the Company’s ability to continue growing at unprecedented rates; and (d) Finisar failed to disclose known trends and uncertainties as required by SEC regulations concerning its revenue growth rate.
On April 29, 2011, the Court released an order reassigning the case to Judge Edward J. Davila.
On May 4, 2011, the Court issued an order granting the unopposed motion to relate docket numbers 11-1278 CW and 11-1635 PJH to the current action.
On October 27, 2011, the Court issued an order appointing the lead plaintiff and approving the the lead counsel. On January 20, 2012, the lead plaintiff filed their consolidated complaint.
On January 16, 2013, the Court issued an Order granting the Defendants' Motion to Dismiss. Plaintiffs were given leave to filed an amended complaint. The amended complaint was filed on February 6, 2013.
On September 30, 2013, the Court issued an Order granting the Defendants' Motion to Dismiss. The Clerk was directed to close this case. Plaintiff filed a Notice of appeal of this decision on October 25.
On March 25, 2016, the Court of Appeals issued a memorandum reversing decision of the District Court and remanding for proceedings consistent with their opinion.
On July 15, 2016, Plaintiffs filed a second amended complaint. Defendants filed a Motion to Dismiss on August 19, 2016. The Court issued an Order Denying Defendants' Motion to Dismiss on May 1, 2017.
Plaintiffs filed a Motion for Class Certification on August 14, 2017. The Court issued an Order Denying the Motion for Class Certification on December 5.
On February 5, 2018, Plaintiffs filed a Petition for permission to Appeal the decision of the District Court to Deny the Motion for Class Certification. On February 13, the Court issued an Order staying the action pending the Appeal in the Ninth Circuit. On July 16, the Court of Appeals denied the petition for permission to appeal the Court's Order Denying Class Action Certification. On October 10, Plaintiffs filed a Motion for Class Certification. On May 24, 2019, the Court issued an Order treating the Motion for Class Certification as a Motion for Reconsideration of the previous Motion for Certification. The Court denied that Motion and granted Defendants' Motion for Judgment. On June 20, Plaintiffs filed a Notice appealing the Court's Judgment and Orders Striking the Motion for Class Certification and Denying Class Certification. The appeal was voluntarily dismissed on July 10, 2020.
On July 8, 2020, the parties entered into a Stipulation and Agreement of Settlement. The Settlement was preliminarily approved on October 1. On February 16, 2021, the Court granted final approval of the Settlement and entered Final Judgment.