Settlement with PricewaterhouseCoopers Reached in Class Action Suit
Sacramento, CA – The California State Teachers’ Retirement System has reached a preliminary settlement of $17.5 million with PricewaterhouseCoopers in a class action lawsuit accusing the accounting firm of violating its professional responsibilities in its audits of Homestore.com Inc. in 2000 and 2001.
The settlement, reached between the accounting firm PricewaterhouseCoopers and CalSTRS, the lead plaintiff, was submitted today to U.S. District Court Judge Ronald S. W. Lew of Los Angeles for review. If Lew grants preliminary approval, a final settlement hearing date will be set.
In agreeing to the settlement, PricewaterhouseCoopers did not admit to any wrongdoing.
“This settlement is another step forward in our goal to help compensate those who lost money they invested in Homestore,” said Jack Ehnes, chief executive officer of CalSTRS. “We want to send a clear message to the market place that all parties are accountable when shareholders suffer due to corporate misconduct.”
CalSTRS filed suit Nov. 15, 2002, against Homestore.com, several of its officers and PricewaterhouseCoopers accusing the company and other defendants of falsifying financial statements and engaging in accounting irregularities to meet Wall Street expectations.
In August, 2003, Homestore.com agreed to a settlement to reform its corporate policies, pay $13 million in cash to the class and turn over 20 million shares of stock. The stock was valued at about $4 a share at the time of the settlement.
All but two of the company officers named in the suit also reached settlements, leaving legal action pending against Stuart H. Wolff, former chief executive officer and chairman of the board, and Peter B. Tafeen, former executive vice president, business development and sales.
The suit is being prosecuted on behalf of CalSTRS and the class by Cotchett, Pitre, Simon & McCarthy of Burlingame, California, lead counsel, and co-counsel Wasserman, Comden, Casselman & Pearson of Tarzana, California.
The class covers all persons who purchased or acquired Homestore common stock from January 1, 2000 through December 21, 2001.
At $126.6 billion, CalSTRS is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s public school teachers from kindergarten through community college, serving more than 755,000 members and their families.