* Class action settlement requires U.S. judge's approval
* Judge certified investor class in December
* Investors contended misstatements caused stock price drop
By Nate Raymond
Feb 20 Lockheed Martin Corp has agreed
to pay $19.5 million to settle a securities fraud class-action
lawsuit accusing the company of misleading investors about the
prospects for its information technology division, according to
The settlement, which requires a judge's approval, was
detailed by the plaintiffs in papers filed in U.S. District
Court in New York on Tuesday.
The accord would resolve more than two years of litigation
by shareholders who blamed alleged misstatements by Lockheed for
a decline in its stock price.
Spokeswoman Jennifer Allen said in a statement Wednesday
Lockheed agreed to the accord to "to avoid the expense and
distraction of litigation."
"We continue to believe that our disclosures were legal and
appropriate and that we would have prevailed in the litigation,"
Samuel Rudman, a lawyer for the plaintiffs at Robbins Geller
Rudman & Dowd, declined comment.
The lawsuit was filed in July 2011 by the City of Pontiac
General Employees' Retirement System, the public employees'
pension fund for Pontiac, Michigan. It named as defendants
Lockheed and company executives, including Chief Executive
The plaintiffs alleged that Lockheed overstated the
financial projections for its information systems and global
services division for 2009.
After the company announced disappointing results for the
division in July 2009, shares dropped 8 percent to $75.13, the
complaint said. The lawsuit said the decline was due to the
alleged fraud coming to light.
The company denied the allegations. Lockheed last year
sought to dismiss the lawsuit after saying six former employees
who were not identified by name in the complaint recanted
statements supporting the securities fraud allegations when the
company learned their identities.
The judge held a hearing in October in which five of the
witnesses testified to what they told a private investigator
hired by the plaintiffs' law firm.
After that testimony, Senior U.S. Judge Jed Rakoff said he
questioned the credibility of three of the witnesses. In
December, the judge denied Lockheed's bid to dismiss the lawsuit
and certified the case as a class action.
Lawyers for the lead plaintiff at the law firm Robbins
Geller plan to ask Rakoff to award them as much as a third of
the settlement as fees as well as reimbursement of up to $1
million in expenses, according to papers filed Tuesday.
The case is City of Pontiac General Employees' Retirement
System v. Lockheed Martin Corporation, et al., U.S. District
Court, Southern District of New York, 11-05026.