Six years ago a group of investors brought a class-action lawsuit against Sprint, accusing the wireless carrier of fraudulently inflating bond and stock prices after the company merged with Nextel Communications in 2005. The lead plaintiffs claimed they were defrauded, with damages estimated at $1.079 billion.
According to investors, Sprint falsely claimed that the merger resulted in billions of dollars in benefits, when really the company was having difficulty integrating cellular networks and lost hundreds of thousands of customers. Investors claimed the fraudulent inflation of stock prices occurred between 2006 and 2008.
Sprint, 80 percent of which is now owned by Japanese telecommunications corporation SoftBank, recently settled the class-action lawsuit, agreeing to pay out 12.1 percent of the damages claimed by the plaintiffs. The settlement comes to about $131 million, with all defendants denying liability.
A spokesperson for the Kansas-based company said the settlement is a way for Sprint to avoid the cost of continued litigation. She went on to say that "Sprint has and will continue to operate in complete adherence with all federal securities laws."
If you have any questions regarding the subject of securities litigation, then don't hesitate to contact an attorney with experience in this complex area of law. The attorneys of Shepherd, Finkelman, Miller & Shah represent clients on both sides of securities-related disputes. Our firm has offices in New York, New Jersey, Pennsylvania, Wisconsin, Florida, California and Connecticut. To learn more about our areas of practice, please see our Securities Regulation and Corporate Governance overview.