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 The all-cash settlement made public on Monday resolves claims that
Sprint, former Chief Executive Gary Forsee and other officials
fraudulently inflated the company's stock and bond prices between
October 2006 and February 2008.
Investors said the defendants falsely touted that Sprint was
receiving billions of dollars of benefits from the merger and
improving its subscriber base by tightening credit standards.
Instead, investors said Sprint was struggling to integrate its
cellular networks and was losing hundreds of thousands of
subscribers, culminating in a $29.7 billion goodwill writedown in
February 2008.
All of the defendants denied liability in agreeing to settle the
6-year-old lawsuit, according to settlement papers filed with the
federal court in Wichita, Kansas. The preliminary accord requires
court approval.
Sprint spokeswoman Stephanie Vinge said the Overland Park,
Kansas-based company settled to avoid the cost and distraction of
litigation. "Sprint has and will continue to operate in complete
adherence with all federal securities laws," she added.
Japan's SoftBank Corp <9984.T> now owns 80 percent of Sprint.
The lead plaintiffs are the United Steelworkers' Pace Industry
Union-Management Pension Fund, Skandia Life Insurance Co and the
West Virginia Investment Management Board.
Their lawyers, led by Robbins Geller Rudman & Dowd and Motley Rice,
said the payout represented 12.1 percent of the estimated $1.079
billion of damages, a percentage they called "very large."
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Tor Gronborg, a Robbins Geller partner, declined to comment.
The plaintiffs' lawyers plan to seek legal fees of up to 22 percent
of the settlement, plus up to $4 million for expenses, court papers
show.
Shares of Sprint were down 1.1 percent at $4.70 in afternoon
trading. Its market value was about $18.8 billion at Monday's close.
The company has in recent months offered discounts to entice
prospective subscribers to switch carriers. Its rivals include AT&T
Corp and Verizon Communications Inc.
The case is Bennett et al v. Sprint Nextel Corp et al, U.S. District
Court, District of Kansas, No. 09-02122.
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