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Taser Shareholders Accept $20 Million in Security Fraud Action Pending Court Approval
On August 9, 2006, Taser International, Inc. (Taser) proposed $20 million in company stock, cash and insurance proceeds to settle shareholder class action and derivative suits pending in the U.S. District Court for Arizona and derivative suits pending in the Arizona Superior and Delaware Chancery Courts. In return, all claims would be dismissed with no admission or presumption of liability or wrongdoing, pending final document acceptance and court approval.
The terms of the agreement state Taser will pay $4.1 million from insurance proceeds, $7.9 million in company cash and $8 million in stock or cash (at Taser?s option) to settle the class action suit in Arizona. The plaintiffs? attorney fees will be paid with $1.75 million in stock, and Taser will designate a lead independent director for corporate governance provisions to settle the derivative suits in Arizona and Delaware, provided all actions are dismissed.
CEO XXX Smith said the ?driving force? behind the settlement was the company?s commitment to its shareholders and customers. Chief Financial Officer Behrent said the settlement was ?an amount we could adequately manage? and ?was the best choice.? In connection with the agreement, Taser will retain $10 million to purchase common stock. Lead counsel for the plaintiffs stated, ?...it does not appear that the company oversold the safety ... not that there was any evidence of wrongdoing,? and ?as a result, we accepted company stock as payment for our legal fees because we believe in the future of the company.? The Securities and Exchange Commission recommended that no action be taken and terminated its investigation.
The shareholders affected were those who purchased, converted, exchanged or otherwise acquired common stock between November 4, 2004 and January 6, 2005, and the document preparation and acceptance may take several months. If not completed, the parties may attempt another settlement or resume litigation. See: In Re Taser International Shareholders Derivative Litigation, USDC AZ, Case No. CV 05-123-PHX-SRB.
The terms of the agreement state Taser will pay $4.1 million from insurance proceeds, $7.9 million in company cash and $8 million in stock or cash (at Taser?s option) to settle the class action suit in Arizona. The plaintiffs? attorney fees will be paid with $1.75 million in stock, and Taser will designate a lead independent director for corporate governance provisions to settle the derivative suits in Arizona and Delaware, provided all actions are dismissed.
CEO XXX Smith said the ?driving force? behind the settlement was the company?s commitment to its shareholders and customers. Chief Financial Officer Behrent said the settlement was ?an amount we could adequately manage? and ?was the best choice.? In connection with the agreement, Taser will retain $10 million to purchase common stock. Lead counsel for the plaintiffs stated, ?...it does not appear that the company oversold the safety ... not that there was any evidence of wrongdoing,? and ?as a result, we accepted company stock as payment for our legal fees because we believe in the future of the company.? The Securities and Exchange Commission recommended that no action be taken and terminated its investigation.
The shareholders affected were those who purchased, converted, exchanged or otherwise acquired common stock between November 4, 2004 and January 6, 2005, and the document preparation and acceptance may take several months. If not completed, the parties may attempt another settlement or resume litigation. See: In Re Taser International Shareholders Derivative Litigation, USDC AZ, Case No. CV 05-123-PHX-SRB.
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Related legal case
In Re Taser International Shareholders Derivative Litigation
| Year | 2006 |
|---|---|
| Cite | USDC AZ, Case No. CV 05-123-PHX-SRB |
| Level | District Court |
| Conclusion | Settlement |
| Attorney Fees | 1,750,000.00 |
| Damages | 18,250,000.00 |
| Injunction Status | N/A |