Prior to 1999, even the most dangerous cases for directors and officers to defend from a liability or damages standpoint were resolved for less than $100 million. Since that time, however, the size of D&O settlements, particularly in securities class action lawsuits, has increased dramatically.

The following examples, grouped by type of plaintiff, underscore the potential for liability of even the most well-run of corporations and illustrate the severity and magnitude of director and officer liability. The reader should note that in many of the examples D&O liability insurance may not have been available or adequate either due to insufficient insurance limits or policy exclusions.

Class Action—Securities

·   A $960 million settlement in a consolidated securities class action litigation against McKesson Corp. and its directors and officers. The litigation alleged the defendants misrepresented material information in connection with its acquisition of HBO & Co. for $12 billion in stock and the company's subsequent restatement of earnings related to software sales due to improper revenue recognition. Four former executives pled guilty to various criminal charges relating to the wrongdoing, and criminal charges remain pending against other company officials.

·   A $457 million settlement in a securities class action against Waste Management and its directors and officers. The lawsuit alleged that the defendants misrepresented material facts regarding the company's 1998 merger with USA Waste Services, Inc. and a 1999 accounting scandal which resulted in the company twice revising reported earnings and taking a $1.8 billion writeoff.

·   A $410 million settlement in a securities class action against Raytheon Company and its directors and officers. The lawsuit alleged accounting irregularities in connection with the Raytheon Engineering & Constructors division and a failure to take appropriate write-downs on a plane refurbishment program for the U.S. Navy. The settlement calls for payment of $200 million cash, to be funded partially by insurance, and warrants valued at $210 million. The company's auditors, PricewaterhouseCoopers, have agreed to pay an additional $50 million to settle the claims against them.

·   A $300 million settlement in a securities class action against Oxford Health Plans, Inc. and its directors and officers and auditor. The Lawsuit alleged the defendants misrepresented material information about the company's financial condition and operations, primarily as a result of a defective computer system that could not handle the HMO's billing and claims data. The auditor paid $75 million of the settlement and $225 million was paid by Oxford and its insurers.

·   A $300 million settlement in a securities class action against Bristol-Myers Squibb Co. and its directors and officers. The lawsuit alleged that the defendants made overly optimistic statements about its investment in ImClone Systems, Inc. and the likelihood that ImClone would obtain FDA approval for one of its new drugs. Plaintiffs also alleged that the defendants overstated the company's revenue between 1999 and 2001 by $2.5 billion by offering incentives to wholesalers.

·   A $300 million partial settlement of securities class action litigation by Chrysler Corp. shareholders against Chrysler Corp., Daimler Benz and the CEO of Daimler Benz. The consolidated litigation alleged that Daimler Benz's CEO misled investors in connection with the merger of Chrysler and Daimler Benz in 1997 by stating at the time of the merger that it was a “merger of equals,” when in fact he always intended to make Chrysler a subsidiary of Daimler Benz. The CEO was allegedly motivated to make the misleading statement in order to enhance the likelihood that Chrysler shareholders and the U.S. Government would support the proposed merger and in order to avoid paying shareholders of Chrysler a premium to acquire Chrysler. Insurers reportedly paid $220 million of the settlement.

·   A $220 million settlement in a securities class action lawsuit against Waste Management, Inc. and its directors and officers and auditor. The lawsuit alleged that the defendants overstated the company's profits over several years, resulting in a restatement of the company's financial statements with a $1.32 billion adjustment in previously reported profits for the preceding six years.

·   At least a $193 million settlement in a securities class action against Rite Aid Corporation and its directors, officers and outside auditor. The lawsuit alleged that the defendants engaged in various earnings-inflating and expense-deflating accounting practices, which resulted in the company restating its financial statements for three years and removing approximately $1.5 billion of after-tax earnings from those financial statements. The settlement was funded with $43.5 million in cash and 20 million shares of common stock, with a guaranteed minimum value of $149.5 million. Claims against the former chairman, CFO and president of the company, as well as the company's auditor, were not released as part of the settlement and were subsequently pursued by plaintiffs.

·   A $179 million settlement of the securities class action claims against former outside directors of Enron Corp. The claims alleged the defendants failed to disclose in securities offering documents the true financial condition and performance of Enron, which ultimately filed bankruptcy. $13 million of the settlement amount is being contributed personally by the outside director defendants as disgorgement of gain they realized on their sale of Enron stock. The settlement does not settle any of the claims against numerous other former officers and directors.

·   A $162 million settlement in a securities class action lawsuit against Dollar General Corporation and its directors and officers. The lawsuit alleged that the defendants materially misrepresented financial information regarding the company, ultimately resulting in the company restating its financial statements for fiscal 1998, 1999 and 2000. During that time period, the company raised $200 million in a debt offering and certain individual defendants sold nearly $300 million in company securities through a registered offering.

·   A $154 million settlement in two class action suits against Salomon, Inc. and its directors and officers. A class action on behalf of purchasers of U.S. Treasury securities was settled for $100 million. That lawsuit alleged that the defendants repeatedly submitted false bids in auctions for U.S. Treasury securities thereby artificially inflating the auction price for those Treasury securities. A related class action on behalf of purchasers of Salomon, Inc. securities was settled for $54 million. That lawsuit alleged violations of the Federal securities laws by reason of misrepresentations and omissions by the defendants of material facts relating to the Treasury auction improprieties, which ultimately resulted in a substantial drop in the trading price of Salomon securities.

·   A $139 million settlement in a securities class action lawsuit against Symbol Technologies, Inc. and its directors and officers. The lawsuit alleged that defendants fraudulently misrepresented the company's revenues and profits, resulting in artificial inflation of its securities. The terms of the settlement require the company to distribute to the class common stock worth at least $96.25 million and $38.75 million in cash. The company's former CEO will personally pay $4 million cash. The settlement does not resolve related shareholder litigation against Symbol's auditor.

·   A $122 million settlement in a securities class action against Mattel, Inc. and its directors and former officers. The lawsuit alleged the defendants misrepresented material information relating to Mattel's acquisition of The Learning Co. Mattel acquired that company for $3.5 billion in stock and was forced to sell the company one year later for no cash and a portion of any future profits from the company.

·   A $120 million settlement in a securities class action against Conseco, Inc. and its directors and officers. The lawsuit alleged that the defendants misrepresented the company's financial results for 1999.

·   A $113.7 million settlement in a securities class action lawsuit against MicroStrategy, Inc. and its directors and officers. The lawsuit alleged that the defendants misrepresented the financial condition and performance of the company, resulting in a restatement of the company's financial statements for three years. As part of the settlement, the company issued notes to the class members for $80.5 million in cash and a distribution of company stock guaranteed to be worth at least $16.5 million. Some of the company stock was paid directly by the D&O defendants. The cash portion of the settlement was payable in five years, although the company is required to make interim payments of $3 million every six months.

·   A $100 million settlement in a securities class action lawsuit against Honeywell International, Inc. and its directors and officers. The lawsuit alleged that the defendants misrepresented the success of Honeywell's merger with Allied Signal, Inc., thereby artificially inflating the price of Honeywell's securities. The lead plaintiffs were institutional investors. The company's insurers reportedly paid $85 million of the settlement.

·   A $92.5 million settlement of federal and state shareholder class actions against The Boeing Company and its directors and officers. The lawsuits alleged that the defendants misrepresented and concealed information about the status of Boeing's commercial airplane production problems and the financial results of those operations. The entire cash settlement was paid by Boeing's D&O insurers.

·   An $82.5 million settlement in a securities class action lawsuit against Aetna, Inc. and several of its directors and officers. The lawsuit alleged that the defendants materially mislead the investing public regarding the company's managed health care business, operations and financial condition.

·   A $75 million settlement in a securities class action against Alcatel Alsthom SA, several subsidiaries, their directors and officers, and the company's D&O insurer. The lawsuit was brought by purchasers of American Depository Shares issued by Alcatel. Plaintiffs allege that the defendants failed to disclose in a registration statement and prospectus relating to the merger of an Alcatel subsidiary with another company that Alcatel would not meet earnings expectations for that year. Immediately following the merger, when Alcatel disclosed the slowdown in product demand and cancellation of orders by several large customers, the market price of the company's ADSs dropped 38 percent.

·   A $70 million settlement in a securities class action against Sotheby's Holdings, Inc. and its officers. The lawsuit alleged that the defendants failed to disclose that its revenue from commissions charged art buyers and sellers was derived from an illegal antitrust conspiracy. One officer defendant pleaded guilty for her role in the price fixing, and another officer defendant was convicted of participating in a criminal antitrust conspiracy. $30 million of the settlement was reportedly contributed personally by one officer defendant. The settlement is in addition to a $512 million settlement by Sotheby's and Christie's in a class action by art buyers and sellers who claimed they paid excessive commissions on art as a result of the antitrust conspiracy.

·   A $61 million partial settlement in a securities class action against Vesta Insurance Group, Inc. and its directors and officers. The lawsuit alleged that the defendants issued false and misleading information regarding the company's financial condition and performance, as evidenced by the company's restatement of its financial statements from 1993 to 1998. Claims against the company's auditor and 28 percent shareholder were not settled.

·   A $58.275 million settlement in a securities class action lawsuit against directors and officers, auditors and underwriters of YBM Magnex International, Inc. The lawsuit alleged that the defendants misrepresented material information regarding the company's financial performance and operations, including the fact that the company was affiliated with an international criminal syndicate. The company also materially misrepresented its financial performance, ultimately resulting in the company acknowledging substantial errors in prior financial disclosures. The company was a Canadian corporation, all wrongful acts occurred in Canada and the lawsuit was prosecuted in the Ontario Superior Court of Justice.

·   A $54 million settlement of the securities class action claims against the outside directors of WorldCom, Inc. $36 million of the settlement amount will be funded by D&O insurance, with the balance being paid by the settling directors personally. The class action lawsuit alleged a “massive” accounting fraud which the Court stated would be easy “for any party” to prove. The settlement does not settle claims against some of the defendant officers.

·   A settlement valued at $51 million in a securities class action against Metro Mobile CTS, Inc. and its directors. The lawsuit alleged the directors failed to obtain the best merger price for the company when it was acquired by BellAtlantic. The entire settlement fund is to be paid in shares of BellAtlantic.

Class Action—Miscellaneous

·   A $165 million settlement in a state court breach of fiduciary duty class action against directors of Digex, Inc. The lawsuit alleged that the defendants breached fiduciary duties owing to Digex shareholders by agreeing to merger terms which were inadequate to the shareholders. The settlement was funded entirely with stock in the acquiring company (World Com).

·   A $157 million settlement in a class action lawsuit against American Continental Corporation, its directors and officers, their wives, and other third parties. The lawsuit alleged that the defendants made materially false and misleading statements about the financial condition, management and future business prospects of ACC and its subsidiary, Lincoln Savings. Separate litigation against the directors and officers of Lincoln Savings and their wives, among others, was settled for $45.3 million.

·   A $130 million verdict against former PTL Minister Jim Bakker. The class action lawsuit was filed on behalf of 145,000 “lifetime” partners, who had each contributed $1,000 in return for time share vacations at Bakker's Heritage USA theme park. In addition, a $7.7 million bankruptcy court judgment was rendered against Jim and Tammy Bakker and another top aide of PTL for reaping undeserved profits and mismanaging the TV ministry.

·   A $110 million settlement in a class action against Prudential Securities, Inc., its parent company and their top officers and directors. The lawsuit, which was brought on behalf of 100,000 limited partnership investors, alleged that the defendants engaged in a scheme to develop and form highly speculative limited partnerships in which shares or units could be fraudulently sold to the unsuspecting public as safe and secure investment vehicles with substantial returns.

Derivative

·   A $230 million settlement in a shareholder derivative lawsuit against directors and officers of Computer Associates, Inc. The lawsuit alleged that the defendants breached their fiduciary duties and unreasonably jeopardized the company's financial condition by awarding to three executives $500 million in stock options. The settlement followed a ruling by the court that the three executives must return 9.5 million of the 20.25 million shares they received under what the court found to be a misinterpretation of the company's compensation plan.

·   A $160 million jury verdict against Cell Tech International, Inc. and two of its officers in a shareholder derivative claim and a direct breach of contract claim by the company's founder, Daryl Kollman. The lawsuit alleged the plaintiff was wrongly fired by the company after a change-in-control, and the defendants breached an agreement to register stock owned by the plaintiff for public sale.

Employees

·   A $145 million settlement of an employee class action suit against Rexene Corporation and certain of its directors, officers and shareholders. The lawsuit alleged that the plaintiff employees were promised but did not receive substantial ownership in the company in connection with a leveraged buyout of the company in 1983 and thus those employees were damaged when the company was sold for a large premium in 1988. Of the total settlement, $45 million was allocated to and paid by the defendant directors, officers and shareholders.

·   A $69 million jury verdict in a lawsuit brought by two former officers of Ashland Oil Co. against Ashland and two senior executives. The claimants alleged that they were wrongfully terminated from employment after they questioned illegal payments made by Ashland to government officials in Oman. The award represented compensatory damages, punitive damages and treble damages pursuant to RICO. The case was subsequently settled for $25 million.

Investors

·   A $70 million settlement in an investor class action against Piper Funds, Inc. Institutional Government Income Portfolio (“Fund”), various affiliate companies of the Fund and their management. The lawsuit alleged violations of state and federal securities laws, negligent misrepresentation and breach of fiduciary duty regarding the Fund's large investments in mortgage-backed derivatives, which plummeted in value after interest rates suddenly rose in 1994.

·   A settlement valued in excess of $60 million in lawsuits against former directors, officers, controlling persons, accountants and lawyers for Alert Holdings, Inc. and its affiliates. The lawsuits alleged the defendants defrauded investors by making false projections and misrepresenting the financial health, prospects and operations capabilities of Alert and its affiliates.

Regulators

·   Two settlements totalling $576 million in civil proceedings against the former chairman and chief executive officers of Towers Financial Corporation. One proceeding, brought by the SEC, alleged the officer operated the bill-collection and health care financing business as a vast Ponzi scheme and was settled for $60 million, $37 million of which was earmarked for investors. The second proceeding, brought by a trustee appointed by the court overseeing the company's bankruptcy, was settled for $516 million.

·   A $100 million consent judgment against the former chairman of a defunct Texas S&L in an action commenced by FSLIC. It was alleged that the defendant breached his fiduciary duty to the thrift and was negligent. The settlement required the defendant to convey to FSLIC nearly everything he owned (including three cars and his personal residence) and to continue to pay FSLIC out of future earnings. Each year for the next ten years, the defendant is required to report to FSLIC that no additional property has surfaced that could satisfy the judgment.

·   An $86 million judgment in a lawsuit brought by FSLIC against former officers and directors of the failed Alliance Federal Savings and Loan Association. The court held the defendants breached their fiduciary duties and that “it is painfully clear” the S&L was operated without any regard for applicable federal regulations or responsible business practices.

·   A $68 million settlement in a lawsuit brought by FDIC against five former officers and directors of Eureka Federal Savings and Loan Assoc. The lawsuit alleged that the defendants' wrongful conduct caused the financial collapse of the S&L. All of the settlement was funded by D&O insurance.

·   A $60 million settlement in a lawsuit brought by the FDIC against former directors and officers of failed Sun Belt Federal Bank of Louisiana. The lawsuit alleged mismanagement of the defendants caused losses to and the ultimate failure of the Bank. The Bank's D&O insurer reportedly paid the entire settlement.

Shareholder Class & Derivative

·   A $145.5 million settlement in securities class action and shareholder derivative litigation against DPL, Inc. and its directors, officers and auditor. The litigation arose out of DPL's investments in numerous Central America ventures, which ultimately resulted in more than $200 million of investment loss to DPL. Plaintiffs alleged that the defendants failed to properly disclose the existence and speculative nature of the investments, the true value of the investments, and the mismanagement of the company's investment portfolio. The auditor reportedly paid $5.5 million of the settlement.

·   A $111 million settlement of shareholder class action and derivative litigation against IKON Office Solutions and its directors and officers. The lawsuit alleged that the defendants artificially inflated the company's stock price by issuing misleading financial reports from 1996 through 1998, during which period the company acquired 220 corporations. The settlement does not resolve related shareholder litigation against IKON's auditor.

·   A $95 million settlement of derivative and class action lawsuits against Chambers Development Company, its directors and officers and accounting firm. The lawsuits arose out of alleged fraudulent accounting policies and practices by the company and its accounting firm regarding capitalization of items that are normally expensed and alleged misrepresentations regarding the company's earnings, assets and net worth. The D&O insurer reportedly paid $8 million of the settlement.

Shareholder—Class Action

·   A $2.83 billion dollar settlement in a shareholder class action against Cendant Corp. and its directors and officers. The lawsuit alleged that the defendants artificially inflated the company's stock price through an accounting fraud, which resulted in the company restating its financial statements for several years. The lead plaintiffs in the litigation were three of the country's largest public pension funds, New York State Common Retirement Fund, New York City's Pension Funds, and the California Public Employees Retirement System.

·   A $259 million settlement in a shareholder class action against 3Com, U.S. Robotics, and various directors and officers of those companies. The lawsuit alleged the defendants misrepresented material facts regarding the companies' financial performance and 3Com's acquisition of U.S. Robotics. The alleged wrongdoing occurred both before and after the acquisition. Two of the lead plaintiffs were institutional investors.

·   A $142 million settlement in a shareholder class action against Informix Corporation, its directors and officers and accounting firm. The lawsuit, which purportedly resulted in the largest securities fraud settlement in the history of Silicon Valley, alleged that the defendants violated the federal securities laws by issuing materially false financial statements for three and one-half years, which were ultimately restated. Prior to the financial statement restatement, eight company executives allegedly sold nearly all of their stock in the company. Fifty-one million dollars of the settlement is payable in cash and the remaining $91 million is payable in company stock. The defendant accounting firm paid $34 million of the $51 million cash portion of the settlement.

·   A $115.5 million settlement of shareholder class actions against Philip Morris Companies, Inc. and its D&Os. The lawsuits alleged the defendants failed to disclose material information regarding the addictive effects of nicotine in cigarettes and regarding alleged manipulation of the company's sales performance through “channel stuffing” of its products.

·   A $75 million settlement in a class action on behalf of shareholders and note holders against IDB Communications Group, Inc., its directors and officers, affiliates and outside auditor. The lawsuit alleged that the defendants made false and misleading statements regarding the company's business, status of operations, earnings, capacity to achieve profitable growth, ability to maintain its ambitious expansion plans and future business prospects.

·   $67.5 million settlement of a shareholders class action lawsuit against Westinghouse Electric Corporation, two of its subsidiaries, and their directors and officers, auditor and securities underwriters. The lawsuit alleged that the defendants violated the federal securities laws by misrepresenting material facts concerning the value of Westinghouse Credit Corporation's commercial real estate loan portfolio. During the class period, Westinghouse announced two separate loan writedowns aggregating more than $2.6 billion.

·   A $66 million settlement of a shareholders class-action lawsuit against eight publicly-traded VMS real estate funds, their manager, directors and officers and advisors. Approximately $20.5 million was paid by D&O insurance proceeds.

Shareholder—Securities

·   A $65 million settlement in a shareholders class action lawsuit against Louisiana-Pacific Corp. and four of its current and former officers. The lawsuit alleged that the defendants violated the federal securities laws by failing to disclose known problems and defects relating to the company's home siding products. In a related class action suit against only the company by homeowners who experienced problems with the company's products, the company agreed to pay up to $375 million. $20 million of the $60 million shareholder settlement was reportedly paid by the D&O insurer.

·   A $55 million settlement of a consolidated shareholder class action lawsuit against Storage Technology Corp. and its directors and officers. The lawsuit alleged that the defendants violated the federal securities laws by failing to disclose that a product planned for shipment in 1992 would be delayed. The company reportedly paid $30.7 million of the settlement and the D&O insurers paid $24.3 million. A related derivative suit was settled for $22 million, the proceeds of which were used to fund the class action settlement.

Shareholder—Other

·   A $490 million settlement in a securities fraud lawsuit against Bank America and certain of its directors and officers. The lawsuits alleged that both prior and after the merger between Bank America and Nations Bank, the defendants made misrepresentations regarding the effects of the merger, as well as the extent of loss exposure for certain loans or investments. Approximately $200 million of the settlement was funded by insurance.

·   A $454.5 million jury verdict in a lawsuit by two individuals against Comp USA, its former CEO, a principal shareholder and two affiliated companies of the shareholder. The plaintiffs in the lawsuit allegedly entered into an agreement with CompUSA to open CompUSA stores in Mexico. The jury found the defendants improperly breached that agreement and awarded the franchising deal to the principal shareholder defendant. The jury allocated the total damage award 65 percent to the former CEO, 25 percent to the principal shareholder, and 10 percent each to two affiliated companies of the principal shareholder. The court subsequently reversed the verdict against CompUSA and its former CEO, and reduced to $121 million the judgment against the principal shareholder.

·   A $454 million jury verdict in a shareholders' lawsuit against directors and officers of Six Flags Over Georgia. The lawsuit alleged the defendants mismanaged the theme park by, among other things, overpaying for park equipment. The jury awarded $197 million in compensatory damages and $257 million in punitive damages.

·   A $72.5 million settlement in a lawsuit brought by former shareholders and employee stock option holders of RJR Nabisco, Inc., against the company and its directors and officers. The lawsuit alleged that the defendants failed to disclose discussion with other merger partners before the company's 1988 LBO. The plaintiffs alleged that if that information had been disclosed, the company's shares would have traded at a higher price and class members who sold their stock prior to the LBO might have held their shares in anticipation of a merger or LBO.

·   A $60.5 million settlement of shareholder lawsuits against former officers, directors and accountants of Crazy Eddie, Inc. The lawsuits alleged the defendants defrauded investors about the financial health of the company, which ultimately filed bankruptcy.

Miscellaneous

·   A $1.47 billion jury verdict against six current or former directors of Amerco Inc., parent of U-Haul International Inc. The lawsuit was brought by members of the Shoen family who own just under one-half of Amerco's common stock and who alleged the defendants, acting on behalf of other Shoen family members who control Amerco, wrongfully prevented the plaintiffs from gaining control of the company and caused the value of plaintiffs' stock to sharply drop. In addition, one of the defendant directors was ordered to pay $70 million in punitive damages.

·   A $1.3 billion settlement by directors and officers of Drexel Burnham ­Lambert Group, Inc. and its subsidiaries. The settlement resolved claims against the settling D&Os which were asserted in more than 180 different lawsuits alleging a wide variety of wrongdoing. $1.2 billion of the settlement is being funded directly by the defendant D&Os, including a $900 million contribution by Michael Milken and his family. The remaining ­settlement contributions will be made by D&O (and perhaps, general liability and fidelity) insurers.

·   A $1.1 billion settlement in a lawsuit by General Motors against Volkswagen and its senior officer (Jose Ignacio Lopez de Arriortua). The lawsuit alleged that the defendants improperly acquired and used millions of pages of GM secrets when Mr. Lopez was hired away from GM by VW.

·   A $600 million settlement in securities fraud, ERISA and derivative lawsuits against Lucent Technologies and its directors and officers. The lawsuits arose from Lucent's December 2000 announcement that its pro forma fourth quarter results had to be substantially reduced to reflect the fact that revenue had been improperly recognized. The lawsuits further alleged that the defendants misrepresented and failed to disclose material information regarding the company's financial condition and performance, as well as business prospects. The company's stock price dropped during the class period from more than $80/share to less than $12/share, reportedly giving rise to the largest damage exposure in securities class action history.

·   A $325 million settlement in a securities fraud lawsuit and an ERISA lawsuit against certain directors and officers of Global Crossing and its subsidiaries and plan fiduciaries. The lawsuits alleged that the defendants improperly accounted for “swap” transactions which eventually led to a massive write-down and Global Crossing's bankruptcy, although Global Crossing never restated its earnings. The D&Os allegedly sold over $1.5 billion of their personal Global Crossing stock during a three-year class period. Approximately $250 million of the settlement was funded by D&O and fiduciary insurance, with the balance coming from Global Crossing's former chairman ($55 million) and former law firm ($20 million).

·   A $300 million jury verdict against three directors of the defunct First Maryland Savings and Loan of Maryland. The lawsuit, which was brought by the Maryland Deposit Insurance Fund, alleged that the directors used the institution's money to enrich themselves and their friends at the expense of the depositors, who lost $165 million when the thrift collapsed.

·   A $200 million settlement in an action brought by the Maryland Deposit Insurance Fund Corp. against Jeffrey Levitt, the former president of the defunct Old Court Savings & Loan Association, which alleged that the defendant defrauded the thrift. Approximately $14 million in assets, which represented virtually everything owned by the defendant (including crystal, furs, coins, art work), were captured. The presiding judge said at the settlement hearing that “nothing more could have been acquired without taking away the Levitts' bed and kitchen utensils”.

·   A $123 million settlement in a securities fraud lawsuit against Medical Care of America, its predecessor companies (Corrections Corporation of America and Medical Care International) and their directors and officers. The lawsuit arose out of the company's revised earnings forecasts just two weeks after its merger. The settlement consisted of $47.5 million in cash and $75.4 million in common stock.

·   A $110 million settlement judgment against five former directors and officers of Seafirst Corp. The lawsuit was filed by Seafirst, a bank holding company, after it was acquired by BankAmerica Corp. and alleged that the Bank's huge losses from energy loan participations with Penn Square Bank were caused by misconduct by the defendants. In the settlement, the defendants were able to limit their liability to the proceeds of Seafirst's D&O insurance policies, which purportedly total $70 million. At least $46 million has been paid by the insurers.

·   A $100 million judgment against Home Shopping Network, Inc. (“HSN”) and two top officers for defamation of GTE Corp. The verdict was issued on a counterclaim in a lawsuit filed by HSN alleging GTE's faulty telephone service caused HSN hundreds of millions of dollars in lost sales. The jury ruled that HSN and its CEO and president falsely blamed faulty telephone service for its plummeting fortunes when the actual cause was mismanagement, poor planning and unbridled growth. The judgment includes a $20 million award against HSN and $40 million each against the CEO and the president of HSN.

·   A $95 million judgment in a lawsuit by General Bedding Corporation against its former officer. The lawsuit alleged that the defendant officer breached his fiduciary duty by misappropriating the opportunity to market a waveless waterbed that he had developed while employed at the company. The lawsuit alleged that the defendant officers initially proposed the product to the company's board, then later reported that it was not feasible while at the same time he was making arrangements with another company to develop and market the product. The jury verdict was rendered against the former officer, the CEO of the competing company and the competing company.

·   A $78.8 million settlement in a lawsuit by the receiver of Home Life Insurance Company against the company's former directors, officers, accountants and attorneys. The lawsuit alleged that the defendants acted in concert to injure the company, thus causing its insolvency.

·   A $75 million judgment against the former chairman of the defunct First Jersey Securities, Inc. The trial court found that the defendant knowingly participated in a penny-stock manipulation scheme and was liable for violations of securities laws since he was “intimately involved” in the perpetration of the frauds and since he was a controlling person of the company. The judgment consisted of $22.3 million disgorgement and $52.7 million in interest.

·   A $70.5 million settlement in a lawsuit by the founder of Ideon Group, Inc. against the company and its former officers and directors. The lawsuit alleged that the defendants wrongfully refused to pay the plaintiff compensation following his departure and that the defendants defamed the plaintiff by suing the plaintiff for alleged insider trading and other wrongdoing. $45 million of the settlement was labeled as compensable personal injury and the remaining $25.5 million was for noncompetition and other matters. The settlement amount was paid by CUC International, which acquired Ideon.

·   A $63 million Texas jury verdict against Datapoint Corp. and two of its officers. The lawsuit was brought by a real estate firm and an investor who were involved in a dispute over a land sale by the company. Pursuant to the jury verdict, the company's chairman was ordered to pay $37 million in exemplary damages and the company's general counsel was ordered to pay $10 million in exemplary damages.

·   A $50 million punitive damage jury verdict against a managing director of First Reserve Corporation. In addition, $63 million in compensatory damages and another $50 million in punitive damages were awarded against First Reserve and other defendants. The lawsuit was brought by Houston Monarch, Inc., which had an agreement to buy a company ultimately purchased by First Reserve. Houston Monarch sought financing from First Reserve for that acquisition. First Reserve allegedly delayed the financing, then stepped in and purchased the company for itself.

Bondholders

·   A $550 million jury verdict against the former chairman of MiniScribe Corp., its accounting firm, investment bank and the investment bank's president. The class-action lawsuit, which was filed on behalf of approximately 20 percent of the company's bondholders, alleged that the defendants manipulated the company's financial statements and perpetrated a “massive fraud” (e.g., shipping bricks instead of computer disk drives to distributors, etc.). The Texas state court jury assessed $250 million in punitive damages against the former chairman and $35 million punitive damages against the president of the investment bank. The case was settled on appeal for $44 million. Numerous other similar suits by other bondholders against the company's former accountants, investment bankers and executives were subsequently settled for $128.1 million.