A vehicle safety company recently announced that it agreed to a securities class action settlement with shareholders.
Autoliv, Inc., noted that the lawsuit was initially filed on April 17, 2013 in the U.S. District Court for the Southern District of New York by the Construction Laborers Pension Trust of Greater St. Louis. The settlement would give the class $22.5 million, which gives Autoliv a net expense for the second quarter of $4.5 million. The company's insurance carrier will pay for the funds.
With the settlement agreement, Autoliv noted that it will not be admitting any wrongdoing or claiming that it was at fault for anything alleged in the lawsuit. The settlement action merely acts as a way to get rid of risk or uncertainties and cut down distraction from the issue.
The deal will still need to be approved by the court, and the company will take part in a fairness hearing at a later date.
Initial allegations against the company in the lawsuit were that the board of directors had its earnings inflated due to not informing shareholders of antitrust violations. This included all shareholders who acquired interests in the company during the class period between Oct. 26, 2010 and July 21, 2011.
Further details on the lawsuit
The securities class action lawsuit was initially filed by the law firm Leiff Cabraser Heimann and Bernstein, LLP, and alleged that the leaders at Autoliv violated the Securities Exchange Act of 1934.
This was due to the company allegedly taking part in business practices that were considered anti-competitive. The actions were considered to be attempts to control the price of items on the market that were sold by Autoliv. There was a rise in the company's stock price that gave the company an artificial level of value. The company's leaders also earned a notable level of money through the process, while they earned further incentive awards.
Further details included the U.S. Department of Justice investigating Autoliv in Feb. 2011, due to the potential for violating antitrust agreements and participating in anti-competitive practices. It had the European Commission raid its German subsidiary due to the issues, and it then alerted the public to this information. When this occurred, the company's stock dropped significantly. By Aug. 2, 2011, the stock price was just $62 per share.