US - The Florida State Board of Administration (FSBA), which runs the $100bn Florida Retirement System (FRS), has settled its lawsuit with Vesta Insurance, after the insurer offered to make substantial corporate governance changes and pay $61m to its shareholders.
The FSBA, which acted as one of the lead plaintiffs, agreed to settle the lawsuit after Vesta agreed to pay $61m to shareholders and arrange the majority of its board to be made up of independent directors.
Other concessions include the guarantee that Vesta's audit, nominating and compensation committees will be comprised entirely of independent directors. The firm also agreed its audit committee would comply with the recommendations of the US Securities and Exchange Commission blue ribbon panel on the effectiveness of audit committees.
Subject to court availability, a hearing has been set for November 30 to approve the settlement. Vesta will contribute $18.5m towards the settlement and the firm's excess directors and officers liability insurance carriers will fund the remaining $42.5m.
Tom Herndon, the FSBA's executive director, said: We are pleased that Vesta has agreed not only to this substantial monetary settlement, but also to corporate governance changes which create an independent majority on the Board and an audit committee with real teeth. Overall, this shows the effectiveness of public pension funds in the class action process as envisioned by Congress in the Private Securities Litigation Reform Act of 1995.
The FSBA was represented in the class action by Thomas Dubbs and James Johnson, partners in the New York based law firm of Goodkind Labaton Rudoff & Sucharow. Other lead plaintiffs were represented by William Lerach of Milberg Weiss Bershad Hynes & Lerach.
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