Computer Sciences Corp. Reaches $97.5 Million SettlementAndrew Zajac
Computer Sciences Corp. agreed to pay $97.5 million to settle a class-action lawsuit over alleged false statements about accounting and the company’s performance on a multibillion-dollar contract.
A proposed settlement was filed yesterday in federal court in Alexandria, Virginia, and is subject to approval by a judge. A hearing on the accord is set for May 24. The case had been scheduled for trial on May 21.
Marcel Goldstein, a spokesman for Computer Sciences, and Deborah Allan, a spokeswoman for the Ontario Teachers’ Pension Plan, whose board is the lead plaintiff in the case, didn’t immediately respond to phone messages requesting comment on the accord.
The settlement covers investors who acquired Computer Sciences common stock from Aug. 5, 2008, to Dec. 27, 2011, according to a filing in the case.
Investors alleged that Computer Sciences officials “made false or misleading statements or omitted to disclose material facts” about the effectiveness of internal controls over financial reporting and about the company’s performance on a $5.4 billion electronic patient records contract with the U.K.’s National Health Service, according to a memo filed in support of the settlement.
The “false statement and omissions caused the price of CSC common stock to be artificially inflated” and subsequently declined “when truthful corrective information was disclosed,” lawyers for the plaintiffs said in the memo.
Computer Sciences, based in Falls Church, Virginia, took a $1.5 billion writedown on the health service contract for 2011. The company has been under investigation by the Securities and Exchange Commission for accounting issues in that contract, according to its annual report.
The case is In Re Computer Sciences Corporation Securities Litigation, 11-cv-00610, U.S. District Court, Eastern District of Virginia (Alexandria).