Deloitte & Touche has agreed to contribute $38.25 million to settle claims in a securities class-action lawsuit against bankrupt auto parts maker Delphi.
Deloitte audited the financial statements of Delphi, which was accused of accounting improprieties that forced the company in June 2005 to restate its financial results for all fiscal periods going back to 1999. Delphi had earlier committed to pay $205 million to settle the case. Additional commitments from its insurance carriers and former banks brought the settlement to more than $325 million.
The settlement is awaiting final approval from Judge Gerald Rosen of the Eastern District of Michigan, who also must give final approval to Delphi's plan of reorganization under Chapter 11.
The lead plaintiffs in the class-action suit were four institutional investors: the Teachers' Retirement System of Oklahoma, Public Employees' Retirement System of Mississippi, Raiffeisen Kapitalanlage Gesellschaft, and Stichting Pensioenfonds. Four law firms represented the plaintiffs: Grant & Eisenhofer, Bernstein Litowitz Berger & Grossmann, Schiffrin Barroway Topaz & Kessler, and Nix Patterson & Roach.
Deloitte said in a statement that it was pleased to resolve the lawsuit. "Although it has strong defenses to these claims, Deloitte concluded that it was in the best interests of the firm and its clients to settle this matter now rather than face the burden, expense and uncertainty of continued litigation," said the firm.
Sean Coffey, co-lead counsel for the plaintiffs with Bernstein Litowitz Berger & Grossmann, acknowledged there was no admission of wrongdoing by Deloitte. "Deloitte has vigorously protested its lack of culpability throughout the litigation and noted that many of the Delphi officers with whom it communicated had been under criminal investigation," he said. In its court papers, Deloitte noted that it had been misled, he added. The Justice Department recently announced that it did not plan to press criminal charges against the Delphi officials.
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