Title: Jackson v. Microchip Technology Inc., No. CV-18-2914
Court: United States District Court for the District of Arizona
Company Name: Microchip Technology Inc.
Securities: MCHP (NASDAQ)
Class Period: March 2, 2018 to August 9, 2018
Class: All persons who purchased or otherwise acquired Microchip Technology, Inc. (“Microchip”) common stock on a U.S. open market during the class period March 2, 2018 through August 9, 2018, both dates inclusive. Excluded from the Class are defendants in this action, Microchip, Steven Sanghi, Ganesh Moorthy, and J. Eric Bjornholt (collectively, “Defendants”), the officers and directors of Microchip during the Class Period (the “Excluded D&Os”), members of Defendants’ and Excluded D&Os’ immediate families, legal representatives, heirs, successors or assigns and any entity in which Defendants or the Excluded D&Os have or had a controlling interest. Also excluded from the Class are any persons or entities who timely and validly sought exclusion from the Class in connection with the Class Notices that previously were disseminated pursuant to the Court’s Order dated August 10, 2021 and the legal representatives, heirs, successors, assigns, or affiliates of any excluded person (“Excluded Class Members”), as set forth in paragraph 1.24 of the Stipulation.
Claim Deadline: July 20, 2022
Settlement Website: www.microchiptechnologysecuritieslitigation.com.
Wolf Popper LLP is Class Counsel in a federal securities fraud class action against defendants Microchip Technology Inc. (“Microchip”); and its then Chairman and CEO Steven Sanghi; President and COO Ganesh Moorthy; and VP and CFO J. Eric Bjornholt. The Class Representative, on behalf of the certified Class of all investors who purchased Microchip common stock on the U.S. open market between March 2, 2018 and August 9, 2018, inclusive (see above), alleges in the action that the Defendants violated the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder by making materially false or misleading statements or omissions during the Class Period related to Microchip’s acquisition of Microsemi in the Spring of 2018. Among other things, the Complaint alleges that Defendants knew, or were deliberately reckless in not knowing, that Microsemi had higher inventory levels in its product distribution channel than what Defendants believed were appropriate, and that Defendants’ statements concerning the combined company’s expected revenue figures, cash flow, and net debt leverage were materially false or misleading.
On August 9, 2018, Microchip stated among other things, that it had “found that Microsemi management was extremely aggressive in shipping inventory into the distribution channel,” and, Microchip had “shipped close to $100 million less in the month of June than Microsemi ex-management would have shipped,” representing “nearly half the inventory correction,” and that Defendants “expect[ed] to achieve the balance of the distribution inventory correction in the next two quarters and nearly complete the correction by the end of this calendar year.” The Complaint alleges that Defendants’ disclosures on August 9, 2018 revealed to the market the truth concerning Defendants’ allegedly materially false and misleading statements during the Class Period, and as a result of these disclosures, on August 10, 2018, Microchip common stock fell $10.67, or 10.9%, per share.
On June 27, 2022, the Court issued an order approving a settlement of the litigation of $9 million in cash for the benefit of damaged Class members.
For further information about this case, contact:
Robert C. Finkel
Joshua W. Ruthizer
Court Grants Final Approval of $9 Million Microchip Settlement
On June 27, 2022, the United States District Court for the District of Arizona granted final approval of a class-wide settlement resolving federal securities fraud claims against Microchip Technology Inc., a publicly-traded semiconductor company (NASDAQ: MCHP) and certain of its officers in exchange for a cash payment of $9,000,000 for the benefit of the certified class. The lawsuit, in which Wolf Popper LLP served as the court-appointed Lead Counsel and Class Counsel, alleged that, between March 2, 2018 to August 9, 2018, the defendants disseminated materially misleading information to the investing public regarding Microchip’s 2018 acquisition of another semiconductor business, Microsemi Corporation.
In approving the settlement, Senior United States District Judge Roslyn O. Silver found that the plan of allocation distributing the settlement proceeds to class members was “in all respects, fair and reasonable to the Class,” and that Wolf Popper “conducted the Litigation and achieved the Settlement with skill, perseverance and diligent advocacy.”
Court Preliminarily Approves Settlement of Class Action
There has been a proposed Settlement of claims against Defendants Microchip Technology Inc. (“Microchip”); and its then Chairman and CEO Steven Sanghi; President and COO Ganesh Moorthy; and VP and CFO J. Eric Bjornholt. The Settlement would resolve a lawsuit in which the Lead Plaintiff alleges that Defendants disseminated materially misleading information to the investing public during the March 2, 2018 to August 9, 2018 Class Period.
Defendants have agreed to pay or caused to be paid a Settlement Amount of $9,000,000. The proposed Settlement provides that the Settlement Amount, after deduction of any Court-approved attorneys’ fees and expenses, notice and administration costs, taxes, and any Court-approved Class Representative’s PSLRA Award, is to be divided among all Class Members who submit a valid Claim Form, in exchange for the settlement of this Litigation and the Releases by Class Members of claims related to the litigation.
Notice of the proposed Settlement was disseminated to Class Members starting on April 1, 2022.
For all details of the Settlement (including the definitions of all terms herein with initial caps), read the full Longform Settlement Notice, available at the settlement website: www.microchiptechnologysecuritieslitigation.com.
The Court will hold a Final Settlement Hearing on June 22, 2022, at 11:00 a.m. to consider whether (1) the Court should approve: (a) the proposed Settlement as fair, reasonable, and adequate; (b) the Plan of Allocation of Settlement proceeds as fair, reasonable, and adequate; (c) the request by the lawyers representing the Class for up to 25% of the Settlement Fund in attorneys’ fees, plus actual expenses of up to $800,000; and (d) the request for a Plaintiff Award of up to $15,000; and (2) the Court should enter the Final Judgment or Alternative Judgment dismissing the Litigation with prejudice. The Court may change the date and time of the Final Settlement Hearing without notice or hold the Final Settlement Hearing by telephone of video conference. Any change to the Final Settlement Hearing will be posted on the settlement website.
Class Certification Granted in Microchip Federal Securities Fraud Litigation
On February 22, 2021, United States District Judge John J. Tuchi granted Lead Plaintiff Ronald Jackson’s motion for class certification in its entirety, certifying a class “of all persons who purchased or otherwise acquired Microchip Technology, Inc. (‘Microchip’) common stock on a U.S. open market during the class period March 2, 2018 through August 9, 2018, both dates inclusive.” Excluded from the class are the Defendants and their affiliates.
The Court also appointed Mr. Jackson as the Class Representative, and Wolf Popper LLP, counsel to Mr. Jackson, as Class Counsel, finding that the requirements of Rule 23(g) of the Federal Rules of Civil Procedure— that a counsel seeking appointment demonstrate that it will fairly and adequately represent the class’s interest—had been met.
Information about the rights of Class members and a copy of the Notice of Pendency of Class Action are available at the Microchip Technology Securities Litigation website: www.microchiptechnologysecuritieslitigation.com/. The deadline for Class members to request exclusion from the Class is November 2, 2021.
District of Arizona Denies Motion to Dismiss Securities Fraud Class Action Against Microchip Technology and its Senior Executives
On March 11, 2020, United States District Judge John J. Tuchi issued an Order denying, in substantial part, the motion filed by Microchip; its CEO Steven Sanghi; its President and COO Ganesh Moorthy; and its CFO J. Eric Bjornholt to dismiss the complaint filed by Wolf Popper LLP, lead counsel in this putative class action. Among other things, the Court concluded that the complaint properly alleges that the Defendants’ statements concerning the historical performance of Microsemi, a competitor acquired by Microchip, were misleading given Microchip’s use of differing accounting practices. The Court found as follows:
Defendants are correct that they were transparent in their communications by saying that Microsemi employed a GAAP basis and Microchip employed a non-GAAP basis. But it is a different matter to conflate the two, report apparently GAAP revenue numbers as non-GAAP numbers, and ultimately to add numbers calculated on different bases to get a sum non-GAAP revenue number. Considering the information [p]laintiff alleges [d]efendants had regarding Microsemi’s inventory-stuffed channel, the Financial Model—and particularly the ‘Microchip + Microsemi’ sum revenue number and the calculations derived from it—was misleading.
In addition, the Court concluded that the complaint properly alleges the defendants’ intent to defraud investors, finding the allegation that they “knew of Microsemi’s inventory and revenue practices and yet misrepresented or omitted key information in communications with investors and stock analysts is cogent and at least as compelling as any nonculpable inference proffered by [d]efendants.”
Wolf Popper LLP Files Amended Complaint Against Microchip Technology Inc.
On February 22, 2019, Wolf Popper filed an Amended Class Action Complaint for Violation of the Federal Securities Laws against Microchip Technology, Inc.; Microchip’s CEO Steven Sanghi; Microchip’s President and COO Ganesh Moorthy; and Microchip’s CFO J. Eric Bjornholt. The Complaint was filed on behalf of Court-appointed Lead Plaintiff Ronald L. Jackson and a proposed class of those who purchased Microchip common stock on a U.S. open public market between March 2, 2018 and August 9, 2018.