Assisted Living Concepts, Inc. and its former CEO have agreed to pay $12 million in cash to settle a class action lawsuit alleging the company’s executives misled shareholders as to the operator’s financial footing and regulatory compliance, according to court documents filed last week in Wisconsin.
Filed in the United States District Court in the Eastern District of Wisconsin on Sept. 6, the settlement agreement is awaiting preliminary court approval and would result in the dismissal of the litigation. Lead plaintiff the Pension Trust Fund for Operating Engineers called the $12 million settlement “fair, reasonable, and adequate” in the memorandum, adding that it marks a “substantial” recovery for the class.
The exact number of class members is not yet known, but is expected to number in the hundreds of thousands, as there were more than 10 million outstanding shares of ALC stock when the company was listed on the New York Stock Exchange. Assisted Living Concepts, formerly traded under the symbol ALC, was delisted after being acquired by private equity firm TPG in a transaction that closed in July 2013.
The proposed settlement for the plaintiffs against defendants ALC and former CEO Laurie Bebo was reached after the lead plaintiff conducted an “extensive” investigation, including interviews of more than forty confidential witnesses and analysis of thousands of documents concerning regulatory proceedings against ALC.
ALC shareholders filed the class action lawsuit against the company in August 2012, claiming that ALC issued false and misleading statements regarding the company’s financials and its compliance with state regulatory departments. Both Bebo and ALC have unsuccessfully motioned to dismiss the lawsuit.
ALC previously settled two other lawsuits, including one involving Bebo which she brought against the company after being fired in May 2012.
June filings with the Waukesha County Circuit Court indicate ALC had settled the suit with Bebo, according to the Milwaukee Journal Sentinel, along with settling another shareholder suit in Milwaukee County, both with undisclosed terms.
Written by Jason Oliva