Securities fraud class action filed on behalf of a class of persons or entities who purchased or otherwise acquired the publicly-traded securities of SafeNet, Inc. ("SafeNet" or the "Company") between March 31, 2003 and May 18, 2006 (the "Class Period").
On February 21, 2007, the Honorable Paul A. Crotty of the Southern District of New York appointed BLB&G client the Police and Fire Retirement System of the City of Detroit, as well as the Plymouth County Retirement System and the State-Boston Retirement System, as Co-Lead Plaintiffs for the Class in the consolidated action. BLB&G was appointed as Co-Lead Counsel.
A Consolidated Complaint was filed on August 1, 2008.
The Consolidated Complaint alleges that during the Class Period, SafeNet and the individual defendants violated the federal securities laws by issuing false and misleading proxy statements and periodic SEC filings. The Consolidated Complaint also alleges that, throughout the Class Period, defendants improperly administered SafeNet stock option plans to provide themselves with unlawful benefits, which they materially misrepresented and failed to disclose to the public and which they failed to properly account for in SafeNet's reported financial statements. Defendants' misrepresentations regarding its stock option grants were disseminated to the public in SafeNet's annual and quarterly filings, as well as annual proxy statements, throughout the Class Period.
The Consolidated Complaint further alleges that in connection with SafeNet's solicitation for the approval of its stock-for-stock merger transaction with Rainbow, effectuated on March 15, 2004, SafeNet and certain of the individual defendants issued a false and misleading registration statement and joint proxy statement/prospectus, thereby injuring Rainbow's shareholders who accepted the terms of the merger exchange. Finally, the Consolidated Complaint alleges that during the second and third quarters of 2005, defendants engaged in improper accounting of revenues and costs relating to certain long-term delivery contracts throughout the Class Period.
In September 2006, SafeNet announced it had concluded that certain of the Company's options grants between 2000 and 2005 had been accounted for using incorrect measurement dates. As a result, SafeNet announced its previously reported financial results for the period from 2000 to March 31, 2006 should not be relied upon. In January 2007, the Company declared it would be making additional adjustments to its prior published financial statements due to accounting errors unrelated to the granting of stock options. Then, on March 5, 2007, SafeNet announced the Company agreed to be acquired by an investment group for approximately $634 million. The acquisition was subsequently approved and closed. SafeNet is yet to publish restated financial results. On July 25, 2007, the United States Attorney for the Southern District of New York announced the filing of a criminal indictment against SafeNet's former Chief Financial Officer Carole Argo for, among other things, engaging in an illegal scheme between 2000 and 2006 to deceive the Company's Board of Directors and shareholders concerning SafeNet's systematic backdating of options grants and causing SafeNet to publish false and misleading financial statements as a result of the backdating scheme.
On August 5, 2009, the Court granted in part and denied in part Defendants’ motion to dismiss the class action. The Court upheld Plaintiff’s core options backdating allegations against SafeNet and its two most senior officers, former Chief Executive Officer Anthony A. Caputo and former Chief Financial Officer Carole Argo. The litigation is now in discovery.
