A Manhattan federal judge granted preliminary approval last month of a $34.5 million settlement between L3 Technologies Inc. and a class of shareholders that accused the company of securities fraud. U.S. District Judge Valerie E. Caproni granted preliminary approval of the settlement between L3, formerly L-3 Communications Holdings Inc., and shareholders in a suit related to the company’s 2014 disclosure of an $84 million accounting error in its aerospace segment that sent its stock falling by roughly 12 percent on the day of the announcement. Under the terms of the settlement, L3 will deposit the cash into settlement fund, pending notification of class members.
A fairness hearing for final approval will be held on August 10 to determine whether the plan for award and dispersal of the settlement is fair to class members. Class members have until July 21 to submit objections to the agreement. The company described the alleged misconduct at the time as wrongly deferred contract cost overruns and exaggerated net sales related to a fixed-price contract for maintenance and logistics support. The involved people in the logistics solutions sector of the company’s aerospace systems segment concealed the bad accounting from other corporate staff and external auditors, officials said at the time. The aerospace systems segment accounts for roughly a third of the company’s sales, including contracts with NASA and the U.S. Army exceeding $100 million.
The investors are represented by Samuel Rudman, David Rosenfeld, Alan Ellman and Ellen Gusikoff Stewart of Robbins Geller Rudman & Dowd LLP, Thomas Michaud of VanOverbeke Michaud & Timmony PC and Cynthia J. Billings of Sullivan Ward Asher & Patton PC. The consolidated case is Patel et al. v. L-3 Communications Holdings Inc. et al. (case number 1:14-cv-06038) in the U.S. District Court for the Southern District of New York.
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