Kansas City, MO: (Oct-29-07) A shareholder class action lawsuit was brought against American Italian Pasta Co. alleging securities law violations. The lawsuit claimed the company indulged in securities law violations after an announcement by the company in August 2005. At that time, the company said it was delaying the filing of certain financial statements with the Securities and Exchange Commission and would also restate a number of previous SEC financial filings.
In a settlement reached, the company agreed to pay $25 million to resolve allegations. The Kansas City-based pasta making company will pay $11 million in cash, all of which will be provided by the company's insurers and $14 million in American Italian stock. The period covered by the class action covers all shareholders who bought stock in American Italian on or after Jan. 23, 2002, and held onto the shares on Aug. 9, 2005; and those who bought stock on or after Aug. 10, 2005, and held the shares as of Aug. 17, 2005.
Beginning in mid-2005, a number of class action lawsuits were filed against American Italian, its board, then current and former officers and its accounting firm, Ernst & Young LLP. Those actions were later consolidated into one shareholder class action lawsuit. The settlement in federal court in Kansas City involves no admission of fault or wrongdoing by the company or any of the individual defendants, which include former chief executive officer Timothy Webster, former chairman Horst Schroeder and former chief financial officer George Shadid. [