BLB&G is Co-Lead Counsel for Lead Plaintiff, the New York State Common Retirement Fund,
in this securities fraud action on behalf of all persons and entities: (i) who purchased or
otherwise acquired publicly traded securities of HBO & Company ("HBOC") during the period from
January 20, 1997 through January 12, 1999, inclusive; (ii) who purchased or otherwise acquired
publicly traded securities or call options, or who sold put options, of McKesson or of McKesson
HBOC, Inc. (collectively the "Company") during the period from October 18, 1998 through and
including April 27, 1999; and (iii) who held McKesson common stock on November 27, 1998 and
still held those shares on January 12, 1999, who were injured thereby.
BACKGROUND
The complaint alleges that, during the Class Period, defendants issued materially false
and misleading statements to the investing public concerning HBOC's and McKesson HBOC's
financial results, which had the effect of artificially inflating the prices of HBOC's
and the Company's securities. On April 28, 1999, the Company issued the first of several
press releases which began to reveal the truth about the financial results and operations
of HBOC and McKesson HBOC, i.e., that it had identified revenues improperly recognized
during the fiscal year ended March 31, 1999, and that it was possible that additional
improperly recognized revenues would be identified. On July 14, 1999, the Company
announced that it was restating $327.8 million of revenue improperly recognized in
the HBOC segment of its business during the fiscal years ending March 31, 1997, 1998 and 1999.
On January 8, 2002 and on January 6, 2003, the district court, in separate orders,
substantially upheld investors' claims against McKesson HBOC, HBOC, Arthur Andersen,
Bear Stearns and certain top officers at McKesson and HBOC.
Separately, McKesson counter-sued the Common Retirement Fund and former HBOC shareholders,
alleging that these investors were unjustly enriched when they received fully-valued
McKesson shares in exchange for HBOC shares that were overvalued due to accounting improprieties
at HBOC. The district court, however, dismissed the counter-claim.
On August 13, 2003, the Ninth Circuit Court of Appeals affirmed the dismissal of
McKesson's claims, essentially ending McKesson's attempts to hold shareholders
individually liable for corporate acts which were neither known nor countenanced by them.
According to the Ninth Circuit, McKesson has "potential legal claims against any number of
parties who, unlike the former shareholders, actually played a substantial role in the decision" to
merge with HBOC, including "the phalanx of investment bankers, lawyers, auditors, accountants and
other advisors associated with the transaction." Moreover, "[t]he sanctity of the corporate entity,
as well as the policies mitigating against subjecting individual shareholders of a public company to a
liability for a merger gone bad, defeat McKesson's effort to turn corporate law inside out."
MCKESSON AGREES TO PAY $960 MILLION
On January 12, 2005, after more than five years of litigation,
Alan Hevesi, New York State Comptroller and sole trustee of the Common Retirement Fund,
announced that McKesson had agreed to pay $960 million in cash to settle all claims
asserted against it and its subsidiary, the former HBO & Company. This is one of the
largest securities class action settlements in history and the largest settlement ever of any
securities class action within the courts of the Ninth Circuit.
According to Comptroller Hevesi, "This settlement is an extraordinary result for
investors, and will serve to deter future violations of the securities laws in the
context of a merger or acquisition between two public companies…I'm pleased that the
New York State pension fund can once again play a role in helping thousands of investors."
A final approval hearing was held on February 24, 2006 before the Honorable Ronald M. Whyte.
On February 24, 2006, the Court granted final approval of Lead Plaintiff's $960 million settlement
with McKesson and HBOC. However, non-settling defendant Bear Stearns & Co. Inc.
appealed the
order approving the settlement to the Ninth Circuit Court of Appeals.
ANDERSEN AGREES TO PAY $72.5 MILLION TO SETTLE ALL CLAIMS
On December 19, 2006, the New York State Common Retirement Fund entered into a settlement
with Arthur Andersen wherein Andersen agreed to pay $72.5 million in cash to settle all claims
asserted against it. This settlement brought the total recovery to more than $1 billion for
distribution to eligible Settlement Class Members. A final approval hearing was held on
April 13, 2007 before the Honorable Ronald M. Whyte. On April 13, 2007, the Court granted final
approval of Lead Plaintiff's $72.5 million settlement with Andersen.
SETTLEMENT WITH BEAR STEARNS BRINGS TOTAL RECOVERY TO OVER $1.04 BILLION
Trial on the claim remaining against Bear Stearns & Co. Inc. was scheduled to begin on October 10, 2007. On or about September 25, 2007, however, Bear Stearns, McKesson and Lead Plaintiff entered into a three-way settlement agreement that resolved the remaining claim against Bear Stearns for a payment to the class of $10 million. Pursuant to the agreement, Bear Stearns also agreed to withdraw its pending appeal of the prior $960 million settlement between Lead Plaintiff and McKesson
On September 28, 2007, the Court entered an order vacating the trial date and
granting preliminary approval of the settlement with Bear Stearns. On October
17, 2007, pursuant to Stipulation, the Ninth Circuit issued its mandate
dismissing Bear Stearns' appeal with prejudice. On January 18, 2008, the
Honorable Ronald M. Whyte granted final approval of the settlement with Bear
Stearns.
Submission of a valid Proof of Claim and Release form is required in order for a
Class Member to participate in the distribution of the funds recovered for the
benefit of the Class. If you are a Class Member and you wish to receive monies
from the recoveries, click on the following documents to receive important
information about your rights and the steps necessary to participate in the
recovery:
Firm partners Max Berger and
David Stickney, Senior
Counsel
Rochelle Feder Hansen
and
Tim DeLange and
associate
Benjamin Galdston are responsible for
prosecuting this action.
