A news release from plaintiff law firm Grant & Eisenhofer said accounting firm PricewaterhouseCoopers and certain outside directors also reached settlements with the investors, paying a total of just over $84 million. Capping a seven-week trial in South Carolina federal court, the judgment was against Kenneth Winger and Paul Humphries, former CEO and CFO respectively of Safety-Kleen.
According to the news release, the case against the company directors, officers and auditors concerned filing false registration statements for a sale of its debt, filing false annual reports and for violating the antifraud provisions of Section 10(b) of the 1934 Exchange Act. The announcement said that after going public in April 1997, Safety-Kleen restated its 1997, 1998 and 1999 financial statements by over $500 million. The company filed for bankruptcy in June 2000.
The institutional investor plaintiffs were led by American High Income Trust, the news release said.
The claims against PricewaterhouseCoopers, which had been Safety-Kleen’s outside auditor at the time the bonds were issued, were that it certified false financial statements as part of the company’s registration documents for its bond offerings.
“We have obtained a recovery of approximately 30% of our clients’ losses from the outside directors and auditors, as well as a judgment for the remaining 70% against the company’s top two management insiders,” said lead counsel Stuart Grant of Grant & Eisenhofer. “Not only was this an excellent economic recovery, but it should send a message loud and clear to auditors and audit committees that they must take a pro-active role to prevent fraud.”
According to the news release, the settlement with PwC and the outside directors not only covered the Securities Act Class Action case but also 32 individual actions brought by institutional investors under the Exchange Act.