StorageTek Announces $55 Million Settlement With Shareholders
LOUISVILLE, Colo. (AP) _ Storage Technology Corp. has reached a $55 million settlement with shareholders in a class-action lawsuit that claimed the company failed to immediately report delays in its Iceberg disk-storage system.
The lawsuit was filed by four shareholders in April 1992 and grew to include several thousand investors. They claimed reports of delays in the release of the Iceberg disk-storage system came months after executives sold off millions of dollars in shares at high prices.
The Louisville, Colo.-based company said the settlement, which was announced Thursday, would result in a one-time pre-tax charge of $30.7 million against its third quarter results.
StorageTek unveiled Iceberg, a high-capacity disk storage device for mainframe computers, on Jan. 28, 1992. The announcement of the $1 million machine pushed stock to a 52-week high of $78 on Feb. 5.
But in late April 1992, StorageTek revealed that problems had delayed Iceberg testing and commercial production. By April 20, 1992, StorageTek’s stock price had fallen to $56.25.
StorageTek shares are now trading for around $26.
The lawsuit contended StorageTek withheld information about delays to keep the company’s stock artificially inflated. It also claimed that 15 officers and directors may have violated insider trading restrictions by selling more than $5.4 million worth of stock before disclosing problems with Iceberg.
The settlement is subject to approval by Denver U.S. District Court. A preliminary hearing is scheduled Sept. 28.