StockerYale settles stockholder suit
StockerYale has agreed to pay more than $3 million to settle a stockholder suit that claimed that its executives either manipulated the stock price or used insider information to enrich themselves at the expense of the shareholders, the company announced on Wednesday.
But the Salem-based optics company – which at the end of last quarter only had $1.6 million in cash – said that its insurance company will cover the entire settlement. StockerYale and its executives admitted to no wrongdoing in the settlement.
The suit stems from two press releases the Salem-based company issued in 2004 touting a contract with BAE Systems. The first release allegedly falsely implied that it was part of new large homeland security contract for commercial aircraft that StockerYale would directly benefit from, dramatically driving up the stock price. As a result of the first release, the suit said, the price shot up, enabling two top executives – CEO Mark Blodgett and his father Lawrence Blodgett, who sits on the board of directors – to use their inside knowledge to make a profit. But as the truth came out, the price plummeted, causing investors to lose out on thousands of dollars, the suit alleged.
StockerYale settled with the Securities and Exchange Commission over these charges back in May 2005. In the settlement, Blodgett agreed to pay approximately $900,000, but didn’t admit any wrongdoing.
The settlement still needs to be approved by a federal district court, and won’t be distributed after notice to the plaintiff class and expiration of the time for appeal from any order of the court approving the settlement. – BOB SANDERS