NEW YORK L3 Technologies Inc said on
Thursday it reached a $34.5 million settlement of a lawsuit by
shareholders who accused the defense contractor of accounting
fraud in its aerospace systems business.
A preliminary settlement was filed on Wednesday night in
Manhattan federal court, and requires approval by U.S. District
Judge Valerie Caproni.
L3 denied wrongdoing. The New York-based company changed its
name from L-3 Communications Holdings Inc at the end of 2016.
Shareholders led by two Michigan pension plans accused L3 of
hiding improprieties, including those raised by an internal
management-level whistleblower, tied to a contract to service
U.S. Army C-12 airplanes.
L3 shares slid 12.3 percent on July 31, 2014, losing about
$1.3 billion of market value, after the company said it would
restate two years of results and fire four people over problems
with the C-12 contract, such as inflated costs and sales.
Chief Executive Officer Michael Strianese and Chief
Financial Officer Ralph D’Ambrosio had also been sued. Caproni
dismissed claims against them last March, finding a lack of
evidence that they acted recklessly or intended to defraud
The lead plaintiffs are the City of Pontiac General
Employees’ Retirement System, Local 1205 Pension Plan, and the
City of Taylor Police and Fire Retirement System.
Their law firm, Robbins Geller Rudman & Dowd, plans to seek
legal fees of up to 25 percent of the settlement amount on
behalf of itself and two other firms, court papers show.
L3 said its insurers would fund the settlement. A company
spokeswoman declined additional comment.
The case, which has a different named plaintiff, is Patel v
L-3 Communications Holdings Inc et al, U.S. District Court,
Southern District of New York, No. 14-06038.
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