Court OKs Plan of Distribution in BISYS Financial Reporting Case
Judge Richard J. Sullivan has issued an order approving the Securities and Exchange Commission’s proposed plan of distribution in SEC v. The BISYS Group, Inc. 07 Civ. 4010 (RJS) (S.D.N.Y.).
Pursuant to the court’s order approving the Plan, A.B. Data, Ltd., the claims administration firm that served as the court-appointed claims administrator in a parallel class action, In re BISYS Securities Litigation, 04-Civ-3840 (JSR) (S.D.N.Y.), will implement the Plan and administer the distribution.
The Distribution Plan will govern the distribution of the approximately $25 million paid by BISYS in settlement of this financial reporting case, plus additional funds added from the Fair Fund created in a related case, SEC v. Steven Wevodau, 08 Civ. 8348 (RJS) (S.D.N.Y.).
Under the terms of the Distribution Plan, the available funds will be distributed to shareholders who acquired and held BISYS stock during the period beginning on October 23, 2000 and ending on April 22, 2004), and suffered a loss on their investment, as calculated under the Plan. Persons eligible to receive a distribution under the proposed Plan are persons who acquired BISYS shares during the Recovery Period, and who incurred a Net Recognized Loss, as defined under the Plan, with respect to their purchase of BISYS shares and (a) submitted a claim that was not deemed deficient in the Class Action; or (b) who opted out of the class in the Class Action.
The SEC’s complaint against BISYS, filed May 23, 2007, alleged that BISYS violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934 by engaging in a variety of improper accounting practices that resulted in material overstatements of BISYS’s reported financial results by roughly $180 million in fiscal years 2001, 2002, and 2003.
As a result, the SEC alleged that BISYS filed annual and quarterly reports, and other documents, that materially misstated its results for the fiscal years ended June 30, 2001, 2002, and 2003, interim quarters during those fiscal years, and the quarters ended September 30, and December 31, 2003. On July 27, 2007, the Court entered a final judgment against BISYS, to which BISYS consented without admitting or denying the allegations in the complaint. BISYS is now known as Citi Investor Services, Inc.