Wallace v. IntraLinks Holdings, Inc., Civ No 11-8871 (TPG)

In November 2015, a federal judge granted final approval of the $14 million settlement in a class action lawsuit alleging violations of the federal securities laws against IntraLinks Holdings Inc., a virtual data room (VDR) – or cloud computing – company, and other defendants for allegedly misleading statements and omissions regarding the strength of the company’s business, and failing to disclose to investors the loss of the company’s largest client.

The settlement in the lawsuit, Wallace v. IntraLinks Holdings, Inc., et al, reached by Lead Counsel Cohen Milstein Sellers Toll PLLC on behalf of Lead Plaintiff Plumbers and Pipefitters National Pension Fund, was approved by Judge Thomas Greisa, of the U.S. District Court, Southern District of New York.

The settlement was the culmination of nearly four hard-fought years of litigation in which the Lead Plaintiff successfully obtained certification of a class of IntraLinks investors who purchased IntraLinks stock between Feb. 17 and Nov. 11, 2011, and a subclass of investors who, purchased stock in the company’s April 6, 2011, secondary offering. The decision was significant in that it was one of the first such decisions following the U.S. Supreme Court’s opinion in Halliburton II, which held that defendants could defeat class certification by rebutting the “fraud-on-the-market” theory of reliance with evidence that the alleged misrepresentations had no impact on the price of the stock in question. 

Judge Griesa had previously granted preliminary approval of the settlement on July 31, 2015, and ordered that notice of the pending settlement and Cohen Milstein’s fee and expense request be disseminated to the Class.  Since then, more than 31,000 notices have been disseminated to potential class members and their nominees.  

To participate in the settlement, Class Members need to submit a proof of claim form with the requested supporting documentation.   The deadline to submit claim forms was Nov. 30, 2015.   More information can be found on the Settlement Website at www.IntraLinksSecuritiesSettlement.com.

In addition to Lead Attorney Carol Gilden, Steve Toll of Cohen Milstein was also involved in the case and settlement..

Case Background

Cohen Milstein Sellers and Toll PLLC has been appointed Lead Counsel on behalf of Lead Plaintiff, the Plumbers and Pipefitters National Pension Fund, and the proposed class of purchasers of common stock of IntraLinks Holdings, Inc. (NYSE: IL) between February 17, 2011 and November 10, 2011, inclusive (the “Class Period”).

On December 5 and December 27, 2011, related actions against IntraLinks Holdings, Inc., Andrew Damico and Anthony Plesner, the Company’s CEO and CFO, respectively, were filed in the United States District Court for the Southern District of New York.  The cases were assigned to Judge Thomas P. Griesa. 

The related actions allege that IntraLinks and its CEO and CFO violated the Securities and Exchange Act of 1934 by failing to disclose that (1) the Company had misrepresented its financial condition throughout the Class Period; (2) the Company had misrepresented the nature and performance of its Enterprise business segment; and (3) as such, the Company’s financial results were overstated. At the start of the Class Period, on February 17, 2011, IntraLinks issued a press release announcing its financial results for its fourth quarter of 2010 and the full year of 2010, touting the Company’s “strong finish” and its “strong position” as it entered 2011.  As part of that press release, the Company provided several guidance points including estimates of $52 to $54 million in revenue for the first quarter of 2011.  In addition, in April 2011, IntraLinks conducted a secondary offering of approximately 7.5 million shares of common stock selling the stock to the public at $25.50 per share, raising more than $191 million.

The actions further allege that just after the secondary offering had been completed, on May 11, 2011, in announcing IntraLinks’ financial results for the first quarter of 2011, the Company reduced its 2011 income projection to $17 to $19 million from $21 to $23 million and also disclosed that a large customer, making up 10% of the Company’s Enterprise business was dramatically reducing its use of IntraLinks’ services going forward and that the Company was reducing its earnings expectations as a result.  Because of these disclosures the price of IntraLinks stock dropped 32.5%.  On August 10, 2011, IntraLinks issued a press release announcing its second quarter 2011 financial results and again reducing its outlook for the third quarter of 2011.  At the same time, the Company disclosed that they had received a subpoena from the SEC seeking documents from January 1, 2011 to the present.  As a result of these disclosures, IntraLinks stock price dropped another 45%.  

Although providing partial disclosures regarding the true operating condition of IntraLinks, the Defendants continued to conceal the Company’s true condition through Nov. 8, 2011 when the Company issued a press release announcing its financial results for the third quarter of 2011, and reported total revenue of just $54.8 million as well as continued problems in its Enterprise business segment.  As a result of these disclosures IntraLinks' stock dropped by another 45%.

On February 3, 2012, Plumbers and Pipefitters National Pension Fund filed a motion seeking appointment as Lead Plaintiff and approval of their selection of Cohen Milstein as Lead Counsel.  On April 3, 2012, Judge Griesa granted the Plumbers National Pension Fund’s motion and appointed them Lead Plaintiff and approved their selection of Cohen Milstein as Lead Counsel.  The consolidated complaint was filed in June 2012.