GSI Group
Practice Area: Securities FraudCase Background
Cohen Milstein has been appointed Lead Counsel in ongoing securities litigation in the U.S. District Court for the District of Massachusetts on behalf of a proposed class of all persons who purchased the securities of GSI Group, Inc. (NYSE: GSIG) from February 27, 2007 through and including June 30, 2009 (the “Class Period”).
GSI designs, develops, manufactures and sells lasers, laser systems, precision motion devices, associated precision motion control technology and systems. The complaint filed in this action (the “Complaint”) alleges that Defendants issued numerous materially false and misleading statements during the Class Period that caused GSI’s securities to trade at artificially inflated prices. Specifically, the Complaint alleges that Defendants’ public statements were false and misleading or failed to disclose or indicate that: (1) the Company improperly recognized revenue during the Class Period; (2) the Company misstated its financial results during the Class Period; (3) the Company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles (“GAAP”); (4) the Company lacked adequate internal and financial controls; and (5) as a result, the Company’s financial statements were materially false and misleading at all relevant times.
On December 4, 2008, GSI announced that it would restate its financial statements for the first and second fiscal quarters of 2008. The fact that a company announces a restatement is generally recognized as an acknowledgement that the mistakes in its financial statements are material in size and importance. Indeed, they were: GSI revealed that revenue of approximately $8,982,000 recognized in the first fiscal quarter ended March 28, 2008 (12.5% of the quarter’s total revenue) and revenue of approximately $7,194,000 recognized in the second fiscal quarter ended June 27, 2008 (10.9% of the quarter’s total revenue) should have been deferred until the delivery of additional equipment in accordance with the Financial Accounting Standards Board’s EITF 00-21, “Revenue Arrangements with Multiple Deliverables.” The Company further disclosed that, as a result of the foregoing, the Audit Committee of the Board of Directors of GSI had determined that the previously issued financial statements contained in GSI’s Quarterly Reports on Form 10-Q for the periods ended March 28, 2008 and June 27, 2008 should no longer be relied upon.
After the Complaint was filed, on February 2, 2009, GSI announced that the problems went further: it had “identified revenue recognition errors related to the incorrect timing in the recognition of revenue from multi-element sales transactions to certain customers in its Semiconductor Systems Segment during 2007.” Therefore, according to GSI, its “previously issued interim and annual historical financial statements for 2007 should no longer be relied upon.” In addition, the Company announced that its Audit Committee had expanded its review to include the Company’s fiscal year 2006 financial reports and statements.
Subsequently, on March 30, 2009, the Company announced that it had “identified errors related to timing of the recognition of revenue from sales to certain customers in its Semiconductor Systems Segment during fiscal year 2006,” and that, consequently, its “previously issued interim and annual historical financial statements for fiscal year 2006 should no longer be relied upon.”
Finally, on June 30, 2009, the Company reported that it was nearing completion of its evaluation of sales transactions in its Semiconductor Systems segment for 2004 through 2008, and gave approximate amounts of restated revenues for those five fiscal years. The Company also announced that it was evaluating sales transactions in its Precision Technology segment for those five fiscal years.
The Complaint alleges that Defendants’ misstatements during the Class Period regarding GSI’s financial results were false when made and thus violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Case News
On February 16, 2011 the Court gave final approval of the proposed settlement of the case pursuant to which GSI and its insurers have paid $3.25 million for the benefit of the class. On February 22, 2011 the Court entered a final order and judgment in the case. More information on the settlement is available on the website maintained by the Court-approved claims administrator in the case at http://www.strategicclaims.net. The claims administrator can also be contacted by telephone at (866) 274-4004.