The BISYS Group, Inc. a financial conglomerate that distributes commercial property-casualty insurance announced today that it has settled a securities class action for $66.5 million.
According to the company the agreement in principle will include actions against the company and former officers and directors that were brought in U.S. District Court in Manhattan.
Part of the settlement will be paid by a $25 million directors and officers liability policy, said BISYS, which advised that the company is currently in discussions with its insurance carriers to determine how much they will pay under the policy.
The proposed settlement involves claims relating to the company’s financial disclosures, including allegations concerning its financial restatements filed in 2005 and 2006, and is conditioned upon successful negotiation of definitive documentation and approval by the Court.
BISYS first announced the restatement in July 2005 after an internal investigation found questionable accounting.
This year the company said the total adjustments in the restatement would result in a reduction in stockholders’ equity of between 8 percent and 8.5 percent as of December 31, 2004.
Under the proposed settlement, BISYS said it will pay an aggregate of $66.5 million in cash into an escrow account within 10 days after preliminary Court approval.
The company noted that the settlement includes no admission of wrongdoing by BISYS or any of the individual defendants.
In addition to insurance policy, the firm said the settlement will be funded with cash on hand and BISYS’s existing credit facility.
The company reached a separate agreement with the Securities and Exchange Commission Sept 26 in a settlement of an investigation into past marketing arrangements with mutual fund advisers.
That investigation, which began in 2004, saw BISYS charged with aiding and abetting, and not with commission of a direct fraud. In the settlement, the company subsidiary that was involved did not admit or deny guilt.
Regarding the latest settlement, Robert Casale, chairman, and interim chief executive officer and president of BISYS, said, “We are pleased to have reached this settlement and firmly believe that it is in the best interest of the Company and its shareholders.”
Mr. Casale, the company’s third CEO in the past two years, called the agreement, “a significant step forward in putting the company’s financial reporting issues from the past behind us and allowing the company to focus on growing its business and pursuing opportunities to maximize shareholder value.”
BISYS Group activities include providing outsourcing solutions for investment firms and insurance companies
Through its Insurance Services group, BISYS is the nation’s largest independent wholesale distributor of life insurance as well as an independent wholesale distributor of commercial property-casualty insurance, long-term care, disability, and annuity products.
Its investment Services group provides administration and distribution services for mutual funds, hedge funds, private equity funds, retirement plans, separately managed accounts, and other investment products.