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Industry News

Judge approves $93 million Homestore settlement

March 19, 2004

California teachers pension fund chief 'delighted' with outcome

Inman News

A federal court judge has given final approval to a $93 million settlement in a class-action shareholder lawsuit against Homestore, the public company that operates the Web site for the National Association of Realtors, among other businesses.

The settlement was announced today by the California State Teachers' Retirement System, the lead plaintiff in the lawsuit. The lawsuit accused Homestore of falsifying financial statements and engaging in accounting irregularities in 2000 and 2001, the pension fund said.

U.S. District Court Judge Marsha J. Pechman, in issuing her ruling March 16, also extended the deadline for class members to submit claim forms until May 31, 2004.

The settlement was announced in August 2003.

Pechman's ruling finalizes that settlement, which called for Homestore to reform its corporate policies, pay $13 million in cash to the class and turn over 20 million shares of stock, CalSTRS said. The stock closed today at $3.95 a share.

Homestore transferred $10 million in cash into an escrow account during the fourth quarter, with the additional $3 million in cash and 20 million shares of common stock due upon final judicial approval of the settlement. The $13 million, net of court-approved costs, and the 20 million shares of newly issued common stock will be distributed to the class, according to a Homestore statement.

CalSTRES CEO Jack Ehnes said the fund was delighted with the final approval.

"We are well on our way to our goal of recovering significant compensation for the members of the class. In addition, Homestore has agreed to unprecedented corporate governance protections for current stock holders," he said in a statement.

The settlement applies only to Homestore. Legal action is pending against other defendants in the case, including former CEO Stuart Wolff, former EVP Peter Tafeen, and PricewaterhouseCoopers, the accounting firm that audited Homestore's financial statements.

At $116 billion, CalSTRS is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California's public school teachers from kindergarten through community college.

Copyright: Inman News Features

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