Tags: sprint | class action lawsuit | fraud | investors

Sprint Settles US Class-action Lawsuit for $131 Million

Tuesday, 31 Mar 2015 10:06 AM


Sprint Corp. has agreed to a $131 million settlement of a class-action lawsuit accusing the third-largest U.S. wireless carrier of defrauding investors about problems dating back to its $36 billion merger with Nextel Communications Inc. in 2005.

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 how 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 did not immediately respond on Tuesday to requests for comment. Japan's SoftBank Corp. now owns 80 percent of the Overland Park, Kansas-based company.

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."

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.

Sprint's 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.

© 2017 Thomson/Reuters. All rights reserved.

 
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Sprint Corp. has agreed to a $131 million settlement of a class-action lawsuit accusing the third-largest U.S. wireless carrier of defrauding investors about problems dating back to its $36 billion merger with Nextel Communications Inc. in 2005.
sprint, class action lawsuit, fraud, investors
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2015-06-31
Tuesday, 31 Mar 2015 10:06 AM
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