On April 9, 2008, the Court issued an Order granting Lead Plaintiff's motion
for approval of distribution of settlement proceeds.
BACKGROUND
On September 18, 2002, EDS announced that it expected earnings for its third
quarter 2002 to fall short of the Company's prior issued guidance by approximately 80
percent. Analysts questioned whether the earnings shortfall resulted from improper
revenue recognition practices on certain contracts in violation of Generally Accepted
Accounting Principles ("GAAP,") including EDS' contract with the Navy. Following
these disclosures, the price of EDS common stock fell from $36.46, prior to the
Company's initial announcement, to $11.68 on September 24, 2002, erasing approximately
$11.8 billion in shareholders' equity.
On July 7, 2003, Lead Plaintiff New Jersey
filed its Amended Consolidated Complaint
(the "Complaint") against EDS, Dick Brown,
EDS' Former Chief Executive Officer, and James Daley, EDS' former Chief Financial
Officer for violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934. In its Practice and
Procedure Order No. 5 dated January 13, 2004, the
Court denied Defendants' Motion to Dismiss the Complaint. The Court determined
that plaintiffs pled sufficient facts to show that serious problems, such as
cost overruns and testing delays, plagued EDS' work on a particular contract -
the Navy Marine Corps Intranet Contract ("NMCI Contract.") The Court found that
plaintiffs' allegations show that despite knowing these problems existed,
defendants continued to issue press releases and earnings statements which
included overstatements of revenue recognized from the NMCI Contract. The
Court also concluded that plaintiffs sufficiently pled that the defendants'
misrepresentations caused the value of EDS' stock to be artificially inflated
during the Class Period. Click
here to read the Court's order.
On November 1, 2004, New Jersey moved the Court to
certify the action as a class action
on behalf of persons or entities who purchased EDS securities between February 7, 2001
through September 18, 2002, and who were damaged thereby. Excluded from the proposed
class are defendants, members of the families of either Brown or Daley, any parent, subsidiary,
affiliate, partner, officer, executive, director of any defendant, any entity in which any
such excluded person has a controlling interest, and the legal representatives, heirs,
successors and assigns of any such excluded person or entity.
By Order dated February 11, 2005, the Court certified the Class.
IF YOU WISH TO BE EXCLUDED FROM THE CLASS, YOU MUST HAVE SUBMITTED A SIGNED REQUEST FOR EXCLUSION
POSTMARKED NO LATER THAN JUNE 28, 2005. Click on the below link for a copy of the Notice.
Notice of Class Action
Firm partner
Edward Grossmann
and Senior Counsel
Niki Mendoza are responsible for
prosecuting this action.
