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Affiliated Computer Services, Inc. Shareholder Derivative Litigation
(193rd Judicial District Court, Dallas County, Texas)
Shareholder derivative action filed on behalf of Plaintiff Anchorage Police & Fire Retirement
System (“Anchorage Police & Fire”) brought for the benefit of Affiliated Computer Services, Inc. (“ACS” or the “Company”), against
certain current and former officers and directors of the Company. This action arises from defendants’ obtaining, approving, and/or
acquiescing in the issuance of stock options to senior executives and directors that were unlawfully backdated to provide the
recipients with windfall compensation at the direct expense of ACS during at least
the period between 1995 and 2002.
On July 13, 2006, the Court appointed Anchorage Police & Fire Co-Lead Plaintiff and BLB&G
Co-Lead Counsel in the Action. On July 21, 2006, Plaintiffs filed an Amended Shareholder Derivative Complaint (the “Complaint”)
in this Action, setting forth specific allegations relating to: (i) the manipulation of ACS stock option grants to certain officers and
directors and (ii) the lack of independence and disinterestedness of ACS’s Board of Directors.
Click here to view the Complaint.
On November 27, 2006, ACS announced the completion of its internal investigation into the Company’s option granting practices
and admitted to backdating past options.
On March 20, 2007, after nearly a year of litigating the options backdating case, ACS announced
that founder and Chairman of the Board of Directors Darwin Deason (“Deason”) and Cerberus Capital Management L.P. (“Cerberus”)
made an offer to purchase ACS for $59.25 per share in a leveraged buyout (the “Proposed Buyout”). On March 26, 2007, BLB&G
amended the Complaint (the “Amended Complaint”) on behalf of Anchorage Police & Fire alleging that (i) the Proposed Buyout
reflected inadequate value; and (ii) the transaction arose from breaches of fiduciary duty because Deason misappropriated Company
information to secure Cerberus’ participation in the transaction. Click
here to view the Amended Complaint.
Beginning in the fall of 2007, BLB&G engaged in
discovery with defendants, obtaining and reviewing hundreds of thousands of
documents and deposing several of the Company's officers, directors, and other
management. BLB&G also prepared expert reports on the subjects of defendants'
violations of applicable accounting rules and the amount of damages suffered by
the Company and its shareholders. In early 2008, BLB&G engaged in a two-day
mediation session with defendants in Texas. Thereafter, BLB&G engaged in another
mediation session with defendants in New York. Settlement discussions are
ongoing.
Firm partners Sal Graziano,
Hannah Ross and
Mark Lebovitch and
associate
John Rizio-Hamilton are responsible for
prosecuting this action.
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