In re Orbital Sciences Corp. Securities Litigation
Along with a $23.5 million cash settlement, we also obtained significant corporate governance reforms.
On February 18, 1999, Labaton Sucharow, as lead counsel for several New York City public pension funds, filed a Complaint against Orbital Sciences Corporation. The Complaint alleged that defendants issued a series of materially false and misleading financial statements and failed to reveal that the company was employing fraudulent accounting methods, which artificially inflated its earnings. The fraud was revealed when Orbital Sciences announced that it would restate three quarters of earnings, which had in fact been decreasing rather than increasing as previously claimed. While Orbital Sciences' stock price was inflated through the improper accounting practices, corporate insiders sold significant amounts of their holdings for gross proceeds of more than $3 million.
After cross-motions for summary judgment were fully briefed, Labaton Sucharow achieved a settlement of $23.5 million and warrants with Orbital Sciences and its auditor, KPMG. The Firm also secured substantial corporate governance changes including:
- the implementation of measures concerning the company's quarterly review of its financial results;
- changes to the composition, role, and responsibilities of its Audit and Finance committee; and
- the adoption of a board resolution providing guidelines regarding senior executives' exercise and sale of vested stock options.
The case is In re Orbital Sciences Corp. Securities Litigation, No. 99-cv-197 (E.D. Va.). Lead plaintiffs are several New York City public pension funds. Defendants are Orbital Sciences Corporation and certain of its senior officers.