SAN FRANCISCO (CN) - Chinese solar panel-maker Suntech Power will pay $5 million to settle a federal class action accusing it of hiding bad financial news from shareholders.
U.S. District Judge Richard Seeborg approved the final settlement on Feb. 12, one day after a fairness hearing.
Lead plaintiff Scott Bruce's 2012 lawsuit claimed Suntech Power Holdings and its CEO Zhengrong Shi kept shareholders in the dark about $700 million in German government bonds pledged as a part of a loan guarantee.
Bruce claimed Shi knew for months that bogus bonds pledged by investment fund Global Solar Fund Capital had been fabricated, and when the news came out, Suntech share price sank by 15 percent in a day, July 30, 2012, to $1.34.
Several 2009 emails from Global Solar Fund official Javier Romero to Shi said the loan guarantee collateral should be kept confidential, according to the amended complaint. Additional correspondence allegedly showed that the company never conducted due diligence on Global Solar Fund, though the Suntech board said precautions were necessary.
The parties agreed on a stipulated settlement on Aug. 14, 2015.
Seeborg wrote in a 7-page order: "The court has determined that the settlement is fair, reasonable and adequate and is herby finally approve in all respects. Defendant has agreed to pay or cause to be paid $5,000,000 in cash for the benefit of the class. Among other things, the recovery of individual class members depends on the number of shares of Suntech American Depository Shares and the amount of Suntech 3.0 percent Convertible Senior Notes those class members purchases and sold and the prices and amounts of transactions by other class members who filed claims."
Class counsel will receive 28 percent of the balance of the settlement fund, after settlement administration expenses and costs, plus $95,445.21 for expenses.
Investment woes and a glut in the market for solar products in 2008 almost doomed Suntech, but Shunfeng International Clean Energy acquired the company in 2014 after it filed for bankruptcy in 2013. The company's American Depository Receipts were subsequently delisted from the New York Stock Exchange and placed on the over-the-counter exchange.
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