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Delphi close to settling investors' class-action fraud lawsuit

Delphi close to settling investors' class-action fraud lawsuit

Attorneys for struggling auto parts maker Delphi Corp. and investors who have accused the company's former managers of fraud are close to settling a lawsuit against the company.
The plaintiffs, including several large pension funds, contend the former Delphi managers fraudulently inflated the company's financial results to make it look more attractive to investors.
Attorneys for both sides were in the chambers of U.S. District Judge Gerald E. Rosen on Tuesday discussing a possible settlement, according to the judge's staff. Rosen also has set aside Wednesday to deal with the class-action lawsuit.
Law firms for the lead plaintiffs, which include the Teachers Retirement System of Oklahoma and the Public Employees Retirement System of Mississippi, issued a news release last week saying that they had reached a settlement agreement that would end the lawsuit. Terms of the settlement were confidential, the law firms said.
The terms, however, still must be approved by Rosen and a federal bankruptcy judge in New York, the statement said.
Delphi spokeswoman Claudia Piccinin declined comment Tuesday, saying that if a final agreement is reached, the company would be required to disclose it.
"Until we reach a final agreement, we are not going to comment further," Piccinin said.
Messages were left for lawyers representing the plaintiffs.
Delphi, in its second-quarter earnings release, reported charges of $332 million (euro242.97 million) related to the litigation. The company previously had set aside $8 million (euro5.85 million).
The lawsuit against Troy-based Delphi and its former managers contends that Delphi, which filed for Chapter 11 protection in 2005, made fictitious asset sales to inflate its results. The company bought the assets back after money from the sales boosted results, according to the lawsuit.
Delphi was the parts arm of General Motors Corp. before being spun off as a separate company in 1999.
The lawsuit named former Delphi Chief Executive J.T. Battenberg and other former executives as defendants.
The U.S. Securities and Exchange Commission in October said it had settled charges of accounting fraud against Delphi and six people, not including Battenberg. The government said in a statement that the company had settled its charges and will not face penalties because it cooperated with investigators.
The Justice Department has also been conducting a criminal investigation of the company related to the accounting practices. A message was left for a department spokeswoman.
Delphi, which recently finalized an agreement for investors to pump up to $2.55 billion (euro1.87 billion) into the company, said it plans to emerge from bankruptcy protection by the end of the year.


Updated : 2021-03-02 00:42 GMT+08:00