Motorola Solutions Inc. agreed to pay $200 million to settle a 2007 investor lawsuit accusing the company of overstating its sales prospects.
The agreement with the company, which was formerly known as Motorola Inc., must still be approved by U.S. District Judge Amy St. Eve, who was scheduled to preside over a trial starting April 9 in Chicago.
“We are pleased to have this behind us,” Nicholas Sweers, a spokesman for the Schaumburg, Illinois-based company, said yesterday in a phone interview. “It removes the risk and distractions of this litigation and enables us to continue to focus on delivering mission-critical communications solutions.”
Stockholder Eric Silverman initially alleged that then-Motorola Inc. Chief Executive Officer Edward Zander and other officers had told investors to expect strong sales growth in the last quarter of 2006. The lead plaintiffs in the case are the Macomb County Employees’ Retirement System and the St. Clair Shores Police & Fire Pension System, both of Michigan.
When the suit was filed in August 2007 amid declining sales, Motorola had fallen from the world’s second-biggest mobile phone maker to third.
“The settlement represents an extraordinary recovery for investors in a case where there was no financial restatement” or an investigation by the U.S. Securities and Exchange Commission, the plaintiffs’ attorney, Samuel Rudman of San Diego-based Robbins Geller Rudman & Dowd LLP, said in a statement.
Motorola Solutions climbed 2 percent to $46.71 at 10:33 a.m. in New York Stock Exchange composite trading. The shares declined 1.1 percent this year before today.
The parties have asked St. Eve to hold a hearing Feb. 16 to consider preliminary approval of the accord.
Zander stepped down as CEO in November 2007. He was later replaced by co-chief executive officers Gregory Brown and Sanjay Jha.
Jha later became founding chairman and CEO of telecommunications handset-maker Motorola Mobility Inc., when that Libertyville, Illinois-based company spun off from Motorola in January 2011.
Motorola Mobility wasn’t a party to the lawsuit and isn’t contributing to the settlement, according to Sweers and Jennifer Erickson, a Motorola Mobility spokeswoman.
Sweers said the settlement would be paid for using a combination of insurance and previously booked reserves.
The case is Silverman v. Motorola, 07-cv-04507, U.S. District Court, Northern District of Illinois (Chicago).