Azon Settles on ESOP Insider Stock Transaction Suit

November 23, 2005 ( - A federal judge has approved a $9.35 million settlement for more than 500 former Azon Corp. workers who charged in a lawsuit that an insider stock transaction wiped out the company's ESOP while earning corporate insiders $25 million.

According to the Binghamton Press & Sun Bulletin, the judge said the settlement, which recovers about 63% of the money due the former employees, is “within the range of settlement values obtained in similar cases.”

Several Azon employees filed the class-action lawsuit in 2002 charging that plan administrators and trustees violated the Employee Retirement Income Security Act of 1974 (ERISA) and breached their responsibilities to shareholders by allowing corporate insiders to sell $25 million in company stock to Azon’s ESOP at an inflated price.   Plaintiffs claim the transaction, which occurred in 1999, caused the company and plan to carry more debt than it could handle and eventually contributed to Azon’s bankruptcy in July 2002, according to the Press & Sun Bulletin.

Feyi Gaji, attorney for the Azon workers, said “They got something, which isn’t very common in the industry.   The defendants could have dragged it out. It’s not a guarantee that if you litigate that you will win. A settlement is always an efficient way to resolve an issue like this. Both sides can now put this behind them and move on.”