Recent Securities Litigations
SAIC Inc (NYSE: SAI)
According to a press release dated February 23, 2012, the complaint alleges that during the Class Period defendants issued materially false and misleading statements regarding the Company's financial performance and future prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (a) that the Company had overbilled New York City hundreds of millions of dollars on the CityTime Project, a project associated with the modernization of New York City's employee payroll system, over a multi-year period; (b) that, as a result of the Company's known, but undisclosed, overbilling practices, its operating results during the Class Period were materially misstated; (c) that its overbilling practices subjected the Company to numerous undisclosed risks, including monetary risks and reputational risks, particularly because government agencies are the Company's primary customers and any harm to its reputation and/or relationships with such agencies would adversely affect its future revenues and growth prospects; (d) that, as a result of the foregoing circumstances, the Company violated applicable accounting standards associated with the recognition of revenue and the disclosure and accounting for loss contingencies; (e) that the Company's financial statements were not fairly presented in conformity with generally accepted accounting principles and were materially false and misleading; (f) that certifications issued by defendants Kenneth C. Dahlberg and Mark W. Sopp associated with the Company's internal and disclosure controls were materially false and misleading; and (g) that, based on the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and its business and prospects.
On August 31, 2011, the Company issued a press release announcing its financial results for its 2012 second quarter, the period ended July 31, 2011. For the quarter, the Company reported an approximate 6% decline in revenue and a 23% decline in operating margin.
Following the Company's 2012 fiscal second quarter earnings announcement, defendants held a conference call with analysts and investors wherein defendants disclosed that the Company's revenues were, in part, adversely impacted by the "wind[ing] down" of the CityTime contract and that, while the Company could not quantify the amount, it believed that it was "probable" that SAIC would have to make restitution to New York City for wrongful conduct on CityTime.
The revelation that the Company would incur a probable loss on CityTime was significant because, pursuant to applicable accounting rules, it served as an acknowledgement that, once the Company could reasonably estimate the amount, it would incur a charge against its earnings for the wrongful conduct alleged herein on CityTime.
In response to this revelation, shares of common stock plummeted nearly 14%, from $15.00 per share on August 31, 2011 to $12.97 on September 1, 2012, as the artificial inflation came out of the Company's stock price.
On June 14, 2012, the Court issued an Order of consolidation. The caption of these consolidated actions shall be "In re SAIC, Inc. Securities Litigation" and the files of these consolidated actions shall be maintained in one file under Master File No. 12 Civ. 1353. The Court also appointed lead plaintiff and lead counsel.
On August 30, 2012, the Plaintiffs filed an amended class action complaint.
On September 30, 2013, the Court issued a Memorandum and Order granting in part and denying in part Defendants' motion to dismiss. However, on January 30, 2014, the Court issued an Order granting the Defendant's Motion for Reconsideration. Plaintiffs' remaining claims were dismissed with prejudice and this case was closed. On September 30, 2014, the Court issued an Order denying Plaintiffs' Motion to Vacate the above Judgment. Plaintiffs decided to Appeal this Order and the preceding orders and judgment on October 30.