The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against SIRVA, Inc. (“SIRVA” or the “Company”), and certain of its senior executives. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired SIRVA common stock during the Class Period.
SIRVA was a giant among moving companies. Names like North American Van Lines, Allied, Pickfords, Maison Huet, and Scanvan, were all part of the SIRVA empire. In November 2003, an investment firm called Clayton, Dubilier & Rice, Inc. (“CD&R”) sold 30% of SIRVA stock to investors for $390 million in an Initial Public Offering (“IPO”). Over the next fourteen months, with Defendants issuing excellent financial reports, SIRVA’s stock increased to the $21-$23 range within less than six months after the IPO, even soaring to over $25 in April 2004, an incredible 42% gain. SIRVA was then able to conduct another Offering, this time selling another 26% of SIRVA to investors in June 2004 for over $400 million, while Defendants continued to meet analysts’ estimates throughout the Class Period.
Specifically, the Complaint alleged the Defendants failed to disclose that in truth: (1) SIRVA had serious and systemic problems in its European operations, an important segment of SIRVA that made up more than 25% of its revenues; (2) SIRVA’s Network Services segment, which constituted another 25% of SIRVA’s revenues, was also materially under reserved; and (3) that Defendants were using the reserves and other illegal accounting manipulations to manage SIRVA’s earnings and meet SIRVA’s estimates. Defendants knew about these problems as far back as before the IPO. When the truth was revealed and Defendants were forced to announce that they would take a multi-million-dollar charge and that prior information in their reporting could no longer be relied upon, the stock dropped from $23.78 per share to $17.95 per share.
Lead Plaintiff filed an Amended Complaint on October 19, 2005. Defendants’ filed their Motions to Dismiss on January 3, 2006. On September 22, 2006, the Court denied in part the Defendants’ motion.
After 2 1/2 years of hard-fought litigation, an extensive investigation which involved conducting nearly 120 witness interviews, and the review of approximately 2.7 million documents produced by Defendants, a two-day mediation was conducted on April 14-15, 2007. Saxena White, P.A., serving as sole Lead Counsel, was able to reach a global $53.3 million dollar settlement with the Defendants on behalf of the Class. In addition, Saxena White conducted a comprehensive review of SIRVA’s corporate governance procedures in an effort to ensure that securities fraud and accounting violations were less likely to occur at the Company in the future. This careful and comprehensive review, which was spearheaded in conjunction with retained corporate governance experts, confirmed that SIRVA had made great strides in improving its governance standards over the course of the lawsuit. This was especially true in the area of its internal controls. The company formally recognized, in writing, that Plaintiff’s lawsuit was one of the main reasons that it reformed its governance standards, confirming that Plaintiff’s action was a key catalyst compelling SIRVA to change the way it did business. On June 25, 2007, the Court preliminarily approved the settlement, and then on October 31, 2007, entered a final judgment finding the settlement to be fair, adequate and reasonable in all respects.