An insurance software provider announced that it finalized a securities class action settlement with shareholders.
Ebix, Inc., announced that its class action lawsuit in the U.S. District Court for the Northern District of Georgia was settled after a final fairness hearing on June 5, 2014. The settlement itself occurred on June 11, 2014. The initial lawsuit, filed in 2011, included all shareholders who acquired stock in the company during the class period between May 6, 2009 and June 30, 2011.
The pending settlement occurred on Feb. 6, 2014, and after this was officially finalized, it dismissed the initial action.
“We are pleased to have put this litigation behind us and look forward to moving ahead with our long-term business development strategy.”
Robin Raina, chairman and CEO of Ebix
Company releases further details
Back in February, Ebix released a statement that shed more light on the settlement details. The payout included a one-time fee of $6.5 million, and the bill was split between the company and its insurer.
With the deal, the company would still deny all of the allegations listed in the lawsuit, and it would also prevent any further risk or uncertainties. There would also be no acceptance of fault by the board of directors by settling the matter.
“We are pleased to settle this litigation matter and move forward with the development of our business,” said Raina.
The company noted in its Form 10-Q for the third quarter of 2013 that it had a contingent liability and a $4.23 million charge against earnings.
Law office files lawsuit in 2011
A law office initially entered the litigation against Ebix in June 2011, after shareholders alleged that the company violated federal securities laws.
Faruqi and Faruqi, LLP, noted that the lawsuit was filed in the aforementioned court for the same class period. The allegations were that the company’s leaders released a number of statements that were either false or misleading, which violated the Securities Exchange Act of 1934, specifically Sections 10(b), 20(a) and Rule 10b-5.
Specific allegations included the company not having sufficient internal controls that prevented it from having accurate financial statements to keep up with the pace of purchases. It also put out statements that may have been misleading in regards to its own organic growth.