Case Name: Symantec, n/k/a NortonLifeLock
Settlement Fund: $70,000,000
Claim Filing Deadline: March 10, 2022
Class Period: 5/11/2017 -- 08/02/2018
Court and Case Number: Northern District of California, 3:18-cv-02902-WHA
On May 10, 2018, Symantec released a cryptic statement:
“The Audit Committee of the Board of Directors has commenced an internal investigation in connection with concerns raised by a former employee… The Company has voluntarily contacted the Securities and Exchange Commission to advise it that an internal investigation is underway… It is unlikely that the investigation will be completed in time for the Company to file its annual report on Form 10-K for the fiscal year ended March 30, 2018 in a timely manner.”
The market did not react well. According to the complaint, “On this news, shares of Symantec fell $9.66 per share or over 33%, from its previous closing price to close at $19.52 per share on May 11, 2018, damaging investors.”
Later that week, on May 14, Symantec provided an update: the investigation was instigated by “concerns raised by a former employee regarding the Company’s public disclosures including commentary on historical financial results, its reporting of certain Non-GAAP measures including those that could impact executive compensation programs, certain forward-looking statements, stock trading plans and retaliation.”
In the consolidated class action complaint, Plaintiffs claimed that, “This securities class action arises from the manipulation of financial results tied to lucrative executive compensation bonus and equity packages… Symantec, together with its top officers reported financial results that violated Generally Accepted Accounting Principles (“GAAP”) and also reported non-GAAP adjustments, which analysts and investors closely followed throughout the Class Period, that were materially false and misleading. When a whistleblower revealed Defendants’ deceptive accounting practices, the Company’s Audit Committee and the SEC launched investigations. With this news and the later disclosure of the results of the Audit Committee investigation, Symantec’s stock price plunged.” Defendants deny the allegations.
The path from these allegations to the settlement took a unique turn earlier this year. But first we must back up to the previous year.
In late June, 2020, the administrator sent out a notice of pendency, which alerted eligible investors that a class had been certified in this litigation and gave them a chance to exclude themselves. This is a standard moment in a securities case. While most often class certification is combined with the settlement terms and the exclusion/opt-out opportunity happens near the claim filing deadline, in some instances the class certification happens long befor any resolution or settlement talks. Such was the situation in the Symantec litigation.
Later, the court learned that an executive named Hans Ek who had been working for the named lead plaintiff firm, SEB Investment Management AB (SEB), got hired by the firm he had personally selected to represent SEB, Bernstein, Litowitz, Berger & Grossmann, LLP (BLBG). As the court put it in their order of April 20, 2021, “Twenty-five months went by [from the date of the first complaint through the date of the order]. Litigation churned forward. Then another law firm, Robbins, Geller, Rudman & Dowd, LLP, on behalf of a class member (Norfolk County Council as Administering Authority of the Norfolk Pension Fund) reported to the Court that Mr. Ek had left SEB and was now working for BLBG.”
The judge, William Alsup, went on:
“After careful consideration of all the evidence and argument, the Court remains unable to determine whether the move of Mr. Ek to BLBG was coincidental versus culpable. It’s possible that there was a quid pro quo of sorts but, if so, it’s not clear in the evidence.
What is crystal clear is that BLBG held Mr. Ek out as the professional who would guide the class through the litigation and direct counsel. Also crystal clear is that BLBG and Mr. Ek failed to tell the Court that he had gone over to the counsel side, meaning had left SEB and joined BLBG. On his way out of SEB, he lateraled his case responsibilities to a colleague, another fact not disclosed to the Court…
We are too far into the case to replace SEB or BLBG, at least on this record. Instead, the Court believes these circumstances should be brought to the attention of the class and a new opportunity given to opt out.”
The court then ordered that a supplemental notice be issued and a new exclusion deadline be created (which has since passed; it was July 2, 2021).
And now, nearly 41 months from May 10, 2018, with Symantec known as NortonLifeLock, with Hans Ek now known as a BLBG employee, we have a settlement for $70 million. Chicago Clearing Corporation is preparing claims already. Please give us a call, and we can help prepare yours.
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