Flash-pusher sTec coughs $36m to settle class action suit
That's a whole quarter's worth of revenue
Flash storage supplier sTec is paying more than its latest quarter's revenue to settle a class action lawsuit.
The settlement fee is $35.8m. sTec earned $35.135m in revenue in its last quarter. The lawsuit concerned allegations that STEC, as it then called itself, had given an "inflated impression" of STEC’s revenue growth and of conditions before a share price drop. The terms of the settlement stipulate that all claims against the flash storage pioneer are settled and no "admission or concession of wrongdoing" is made by the firm or the other defendants.
The latest STEC earnings call included this statement:
On July 30, 2012, the parties to the previously disclosed federal class action filed against the Company and several of its senior officers and directors in the United States District Court for the Central District of California attended a mediation to explore a potential settlement.
During the mediation, the parties considered a settlement that would create a fund for the benefit of the settlement class, with no admission or concession of wrongdoing by the Company or any other defendants, in exchange for a full and complete release of all claims that were or could have been asserted in the federal class action.
... The Company has revised its assessment of this loss contingency and estimates the range of probable loss for the federal class action to be between $34m and $36m...
The Company has recorded the estimated settlement loss and related estimated insurance recoveries in other (expense) income in the accompanying statement of operations resulting in a net charge of $15 million for the second quarter ended June 30, 2012.
Job done then, and one less millstone around sTec's neck as it tries to rebuild its business fortunes. Law360 has more details (subscription or free trial sign-up needed). ®