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Case Overview

Status: Status: Settled
Court: Court: Southern District of New York
Case Number: Case Number: 03-md-01529
Related Practices: Related Practices: Securities
We are co-lead counsel in the securities class action arising from the fraud uncovered at Adelphia Communications Corp. This action, pending in United States District Court for the Southern District of New York (In re Adelphia Communications Corp. Securities & Deriv. Litig., 03 MD 1529 (LMM)), involves one of the largest cases of improper self-dealing by insiders in corporate history. From at least August 16, 1999 through June 10, 2002, Adelphia -- the nation’s sixth largest cable-television company -- systematically and fraudulently failed to report billions of dollars in liabilities in its consolidated financial statements consisting, as of December 31, 2001, of approximately $2.6 billion in loans drawn down by entities owned and controlled by the Rigas Family, Adelphia’s founders and controlling shareholders. Adelphia also inflated earnings to meet Wall Street’s expectations, falsified key operations statistics, and concealed blatant self-dealing by the Rigas Family. Claims are asserted for violations of the securities laws against members of the Rigas Family and other insiders, the Company’s independent auditors, Deloitte & Touche, LLP., investment banking firms which underwrote offerings of Adelphia securities, lending banks and others.

On June 15, 2006, the Court preliminarily approved two separate settlements in this action. The first settlement consists of $210 million from Deloitte & Touche, LLP, Adelphia’s auditing firm. The second settlement is with approximately 36 investment banks and banks that conducted business with Adelphia. The banks have agreed to pay $250 million to the members of the class, subject to reductions not to exceed $35 million. The Court signed the final order approving the settlements on November 11, 2006.

On September 21, 2011, the Court signed a final order approving a settlement in this action with defendants John J. Rigas, Timothy J. Rigas, Michael J. Rigas, James P. Rigas, Peter L. Venetis, Erland E. Kailbourne, Dennis P. Coyle, Leslie J. Gelber, Pete J. Metros and Michael C. Mulcahey (the “Director and Officer Defendants”). The settlement resolved Plaintiffs’ claims against the Director and Officer Defendants and consists of $6,725,000 in cash.

On June 24, 2013, the Court preliminarily approved a settlement in this action for certain claims against Adelphia’s legal counsel defendant Buchanan Ingersoll & Rooney PC (formerly known as Buchanan Ingersoll P.C.) (“Buchanan”) for $12 million (the “Buchanan Settlement”). To receive your share of the Buchanan Settlement, you must file a completed Proof of Claim and Release form on or before December 16, 2013. Your other legal rights and options are set forth in the Notice of Pendency and Proposed Partial Settlement of Class Action (“Notice”) at page 2. Please visit the settlement website at www.adelphiasettlement.com for a copy of the Notice and claim form, which are also available for download under “Accompanying Documents” on the right side of this page. However, if you previously filed a claim in connection with a previous settlement in this consolidated class action and your claim was not rejected, you do not have to file another claim form to participate in the Buchanan Settlement. The trading information you already provided in your prior claim form will be used to determine your claim in this settlement.

The hearing for final approval is scheduled for November 1, 2013 at 11:00 a.m. at the United States District Court for the Southern District of New York, Thurgood Marshall United States Courthouse, located at 40 Centre Street, New York, New York 10007. At this hearing, the Court will consider whether the Buchanan Settlement is fair, reasonable and adequate and in the best interests of the Class. If you have additional questions about the Buchanan Settlement or would like to obtain copies of the settlement documents, please visit www.adelphiasettlement.com. You may also contact Valley Forge, the claims administrator, at 1-877-965-3300 or by e-mail at info@adelphiasettlement.com.

Frequently Asked Questions*

  • A.A class action is a lawsuit in which a large number of people (the “class”) have suffered similar harm from the defendant(s)’ unlawful conduct and the plaintiff(s), also known as the “class representative,” stands in for the entire group of similarly injured persons for the duration of the lawsuit and prosecutes the lawsuit on behalf of the entire class. As such, any result obtained by the class representative in the class action lawsuit applies to all of the members of the class. Class action lawsuits are an efficient legal procedure when it would be impractical or expensive for each similarly harmed individual in the class to file their own lawsuit. Class actions enable shareholders to seek recovery from defendant corporations that have much greater resources without having to bear the financial risk.
  • A.Securities class action lawsuits typically allege that defendant(s), typically corporations that issue publicly-traded securities and their officers, misrepresented or concealed material information, which caused the securities to trade at artificially inflated prices when class members purchased the securities. The class members suffer losses when the previously-concealed information is disclosed, and the price of the securities declines. These actions charge the defendants with violations of the Securities Act of 1933 and/or the anti-fraud provisions of the Securities Exchange Act of 1934.
  • A.A class period is a specified time period during which the injury to the class is alleged to have occurred. In a securities class action, this is the period during which the securities in question traded at artificially inflated prices as a result of the misrepresentations or omissions complained of. The class period proposed in a securities fraud class action may change during the course of the litigation as a result of new evidence obtained or rulings by the court.
  • A.A typical securities class action often takes several years to litigate. The actual time it takes to resolve a specific case varies, depending on the complexity of the case, the issues involved, the procedural stage at which the suit is resolved, and other factors.
  • A.The lead plaintiff is the investor that prosecutes the suit on behalf of the other investors. This plaintiff eventually seeks to be appointed as the class representative of the class. Federal securities laws permit any investor who purchased or acquired the covered securities during the class period to seek appointment as lead plaintiff of a securities class action lawsuit within sixty (60) days of the first press release announcing the first filed securities class action. An individual investor, an institutional investor, or groups of investors can seek to be appointed as lead plaintiff.

    Courts generally appoint as lead plaintiff the movant(s) with the greatest financial interest in the relief sought by the proposed class. The lead plaintiff generally can select a law firm of its choice to litigate the securities class action lawsuit as lead counsel for the class. Courts generally appoint the lead plaintiffs’ chosen law firm as lead counsel.
  • A.If you are interested in seeking lead plaintiff appointment, you can contact Kirby McInerney via email at investigations@kmllp.com or submit a contact form via the firm’s website. Critically, the decision to seek lead plaintiff appointment is time sensitive. Class members have sixty (60) days after a securities fraud class action lawsuit is filed to request the court for appointment as lead plaintiff.
  • A.If you have incurred a substantial loss as a result of purchasing the securities covered by a securities class action, acting as a lead plaintiff provides you an opportunity to take an active role in the litigation of the case and to represent the shareholders in the class. The lead plaintiff must stay apprised of the litigation by overseeing court-appointed lead counsel and remaining informed about the progress of the litigation. If the litigation advances into discovery, the lead plaintiff will be required to participate in discovery and potentially provide documents and testimony relating to the investment in question. You will be able to participate in making critical decisions regarding the litigation, including whether to settle the action and at what amount, and the formula to be used in determining how any settlement proceeds are divided among class members.

    An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff of the securities class action lawsuit. The lead plaintiff is entitled to receive a pro rata share of any classwide settlement or trial recovery. However, as provided for by the Private Securities Litigation Reform Act of 1995, the court will sometimes compensate the lead plaintiff with an additional monetary award for their time and efforts in overseeing the case.
  • A.Any person who purchased the security at issue during the class period is eligible to participate. The attorneys at Kirby McInerney can quickly investigate the facts and advise you on your potential claim, as a lead plaintiff or a class member. Your rights are the same whether you later sold at a loss or have held some or all of your shares in the hope that the price will recover.
  • A.If you do not want to be lead plaintiff, you do not need to take any action at the outset of the litigation in order to participate in the class action as you may remain an absent class member. In the event that the lawsuit is certified by the court as a class action, all members of the class will receive mailed notice informing them of the steps that they will need to take in order to share in any classwide recovery.
  • A.If you are a member of the class, at the point of a classwide settlement or trial recovery, a court-appointed administrator will mail out notifications to class members relating to your claim and the case status. Because securities class actions often take several years, you should be sure to retain your records so that you can provide documentation of your purchases in the event of a settlement or trial recovery.
  • A.To participate in a securities class action, you generally are not required to continue to hold shares of the company after the class period expires. Your standing to participate in the securities class action is derived from your purchase and/or acquisition of shares during the alleged class period. But your decision to sell or otherwise dispose of securities following the class period may impact your damages. Likewise, selling your securities potentially limits your ability to assert other types of claims, including but not limited to shareholder derivative claims.
  • A.Kirby McInerney litigates its class action cases on a contingency fee basis. This means we only get paid if we win the case at trial or if there is a settlement. The Firm does not receive any form of monetary compensation from a client at the outset of litigation or if the lawsuit is unsuccessful in recovering money for investors. Instead, the Firm’s fees are paid out of the recovery if there is a successful resolution to the case and a settlement or judgment is achieved. Attorneys’ fees may vary based on the size of the recovery, the duration and complexity of the litigation, and other factors. Kirby McInerney also generally advances all out-of-pocket costs and court expenses on behalf of its clients. Attorneys’ fees and expense reimbursement requests are subject to court approval. This system helps ensure that many investors with small losses can easily afford to bring class actions to assert their rights.
  • A.Generally, no. Your out-of-pocket losses usually will be greater than recoverable damages. Recoverable damages are affected by the time you purchased and sold your shares, the price of the stock after the class period, and other individual circumstances. Usually, class members are awarded damages that are proportional to the actual individualized harm they suffered.
  • A.As a small investor, if you purchased securities covered by a securities class action during the class period, your rights may already be protected by other investors with more significant losses who have already filed a securities class action. Kirby McInerney’s attorneys are available if you have any further questions about your rights as an investor.

* These "Frequently Asked Questions" are provided by Kirby McInerney LLP for educational and informational purposes only and is not intended and should not be construed as legal advice.

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