ATLANTA (Legal Newsline) - An order has been entered granting preliminary approval of an agreement to settle all claims in a 2011 shareholder securities class action against Ebix in the U.S. District Court for the Northern District of Georgia.
Robin Raina, Ebix's chairman, president and chief executive officer, and Robert Kerris were also named as defendants in the suit.
The order was entered on Feb. 4.
The suit against Ebix, which is a supplier of on-demand software and e-commerce services to the insurance industry, was filed July 21, 2011, on behalf of a class consisting of those who purchased or otherwise acquired the company's common stock between May 6, 2009, and June 30, 2011.
Dan Anghel, the named plaintiff in the suit, claimed Ebix and other officers and/or directors of the company, made materially false and misleading statements during the class period in press releases, analyst conference calls and filings with the U.S. Securities Exchange Commission, according to the complaint.
The order calls for a one-time cash payment of $6.5 million to be funded by Ebix and its insurance carrier.
The court has scheduled a final fairness hearing on the settlement for June 5.
Under the terms of the agreement, the company and certain current officers and directors deny any "liability, fault or wrongdoing" and have agreed to settle this matter solely to eliminate the uncertainties, risk and expense of further protracted proceedings.
The agreement to settle the litigation constitutes neither an admission nor acceptance of fault by any named defendant with respect to the allegations made in the litigation.
"We are pleased to settle this litigation matter and move forward with the development of our business," Raina said in a press release.
As previously disclosed in its Q3 2013 Form 10-Q, Ebix recorded a contingent liability and recognized a charge against earnings in the amount of $4.23 million - $2.63 million net of the associated tax benefit - in connection with this settlement.
That contingent liability was reported in the current section of the consolidated balance sheet, and the charge against earnings was reported below operating income in the consolidated statement of income for the quarter ended Sept. 30 of last year and for the nine months ended on the same day.
This amount represents the portion of the settlement absorbed by Ebix, and management does not expect there to be further exposure to the company with regard to this litigation beyond the legal expenses to finalize the settlement, according to a press release.
The plaintiffs were represented by Stephen E. Connolly, David P. Dean, Jacob A. Goldberg, Richard Gonnello, Corey Daniel Holzer, Sandra G. Smith and Antonio Vozzolo of Faruqi & Faruqi LLP; Marshall P. Dees and Michael Ira Fistel Jr. of Holzer & Holzer LLC; and William Woodhull Stone of the Law Office of William Woodhull Stone PC.
The defendants were represented by Todd Franklin Chatham, Todd Richard David, John Allen Jordak Jr. and Dawn M. Wilson of Alston & Bird LLP.
The case was assigned to District Judge Richard W. Story.
U.S. District Court for the Northern District of Georgia at Atlanta case number: 1:11-cv-02400