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In re Scholastic Corporation Securities Litigation
(United States District Court for the Southern District of New York)
Securities fraud class action brought on behalf of purchasers of the common stock of
Scholastic Corporation, a book publishing company.
Plaintiffs filed action shortly
after Scholastic's shocking revelation on February 20, 1997 that due to
reduced sales of children's books sold through its retail channels (principally
Goosebump books), Scholastic would be taking a special pre-tax charge to reserve
for the return of unsold retail children's books, and anticipated reporting a
significant loss for its third quarter ending February 28, 1997. The next day,
Scholastic common stock lost approximately 40 percent of its value. Plaintiffs allege
that during the class period, from December 10, 1996 through February 20, 1997,
Scholastic and its Vice President for Finance and Investor Relations concealed a
material decline in Goosebump book sales and a material increase in returns of
Goosebump books. Plaintiffs further allege that during this period, this Vice
President sold 80 percent of his holdings of Scholastic stock and Scholastic sold $125
million of notes.
While the Complaint was initially dismissed by the trial court, the Second Circuit
subsequently reversed that decision on appeal. Then on December 10, 2001, the
United States Supreme Court further validated Plaintiffs' claims against Scholastic
when, without comment, it let stand the Second Circuit's unanimous decision.
On September 23, 2002, Scholastic announced that it had agreed to pay $7.5
million to settle the litigation.
On April 2, 2003, the District Court granted final approval of the settlement.
In order to be eligible to share in the settlement benefits, class members must
submit a completed and signed proof of claim form. All claims needed to be postmarked
or received by the claims administrator on or before April 30, 2003. Contact claims
administrator The Garden City Group at (888) 807-3044 for further information.
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