$80 Million Settlement and Significant Corporate Governance Reforms—That's How We Respond to a Corporate Culture of MisconductIn re Vesta Insurance Group, Inc. Securities Litigation
Vesta Insurance Group had a history of fraud. Since the company first went public in 1993 until the middle of 1998, it issued false financial statements to the public. This record of accounting irregularities and errors led to the commencement of a securities class action in June 1998 followed by a $65 million restatement of Vesta's financials in August of the same year.
An $80 million settlement and important governance reforms which changed a corporate culture of fraud.
After extensive discovery, Labaton Sucharow, acting as lead counsel for the Florida State Board of Administration, achieved a settlement of $61 million with Vesta and later settlements of $17 million with the company's outside auditor KPMG and $2 million with Vesta's parent company, Torchmark Corporation, an amount totaling more than Vesta's original restatement.
Equally as significant as the monetary recovery, Labaton Sucharow was able to obtain important governance reforms, which changed the culture of financial dishonesty at Vesta. These reforms included increased independence of Board members and substantial changes to the company's audit committee, improving both its effectiveness and independence.
The Vesta litigation demonstrates Labaton Sucharow's driving philosophy—excellent settlements and corporate governance reform go hand in hand.