This excerpt taken from the ELN 20-F filed Mar 30, 2006.
(A) Shareholder litigation and SEC investigation
During 2004, we recorded $56.0 million (2003: $10.7 million) related to litigation provisions and costs related to the SEC investigation and shareholder class action lawsuit. The expense recorded in 2004 arose primarily as a result of a $55.0 million provision made in relation to settlement of the SEC investigation and the related shareholder class action lawsuit.
We and certain of our former and current officers and directors were named as defendants in a class action filed in early 2002 alleging that our financial statements were not prepared in accordance with GAAP, and that the defendants disseminated materially false and misleading information concerning our business and financial results. We agreed to settle the action in October 2004 and the settlement was formally approved by the U.S. District Court for the Southern District of New York in February 2005. Under the class action settlement, all claims against us and the other named defendants were dismissed with no admission or finding of wrongdoing on the part of any defendant. The principal terms of the settlement provide for an aggregate cash payment to class members of $75.0 million, out of which the court awarded attorneys fees to plaintiffs counsel, and $35.0 million was paid by our insurance carrier.
We were also the subject of an investigation by the SECs Division of Enforcement regarding matters similar to those alleged in the class action. We provisionally settled the investigation in October 2004 and the SEC formally approved the settlement in February 2005. The terms of the class action settlement received final court approval in
April 2005. Under the settlement agreement reached with the SEC, we neither admitted nor denied the allegations contained in the SECs civil complaint, which included allegations of violations of certain provisions of the federal securities laws. The settlement contains a final judgment restraining and enjoining us from future violations of these provisions. In addition, under the final judgment, we paid a civil penalty of $15.0 million. In connection with the settlement, we were not required to restate or adjust any of our historical financial results or information.
The expense incurred in 2003 relates to legal expenses incurred on the SEC investigation and shareholder class action lawsuit.
For additional information on litigation which we are involved in, please refer to Note 25 to the Consolidated Financial Statements.