- This topic is empty.
-
Posts
-
Lexmark Settles Securities Class Action Lawsuit for $12 Million.
Lexmark, a global leader in printing and imaging solutions, has agreed to pay $12 million to settle a securities class action lawsuit that accused the company and its executives of inflating its stock price by concealing the true state of its supplies business.
The lawsuit, Lexmark International, Inc. v. Superior Court of Los Angeles County, was filed in July 2017 by the Oklahoma Pension and Retirement System on behalf of a class of investors who purchased or acquired Lexmark securities between August 1, 2014, and July 20, 2015. The lawsuit alleged that Lexmark and its executives made false and misleading statements regarding its end-user demand, channel inventory and growth prospects for its high-margin supplies business, which accounted for more than half of its revenue.
The lawsuit claimed that Lexmark’s statements were materially false and misleading because they failed to disclose that: (1) Lexmark was experiencing a significant decline in demand and excess inventory for its supplies products; (2) Lexmark’s supplies revenue growth was not driven by end-user demand, but by channel stuffing and price increases; (3) Lexmark’s supplies business was facing increasing competition and pricing pressure; and (4) as a result, Lexmark’s financial statements were not prepared in accordance with generally accepted accounting principles and its reported financial results were materially overstated.
The lawsuit further alleged that Lexmark’s stock price was artificially inflated as a result of these misrepresentations and omissions, and that the investors suffered significant losses when the truth was revealed. On July 21, 2015, Lexmark announced its second quarter 2015 financial results, which missed analysts’ expectations and showed a decline in supplies revenue. Lexmark also lowered its guidance for the full year 2015, citing weak demand and unfavorable currency effects. Following this news, Lexmark’s stock price dropped by more than 20%, from $44.62 per share on July 20, 2015, to $35.15 per share on July 21, 2015.
The case was litigated for more than six years, during which the parties engaged in extensive discovery, motion practice, mediation and settlement negotiations. On January 7, 2024, the court granted final approval to a settlement that resolves the case for $12 million, which represents approximately 10% of the estimated damages for the class. The settlement amount will be distributed to the class members who submit valid claims, after deducting the costs of administration, attorney fees and expenses.
The settlement is a favorable outcome for the class of Lexmark investors, who will receive a substantial recovery for their losses. The settlement also ends a long and complex litigation that involved multiple challenges and risks. The plaintiffs and their counsel are pleased with the result and commend Lexmark for its willingness to resolve the case.
- You must be logged in to reply to this topic.