Summary
Monster Beverage Corp (formerly Hansen Natural Corporation) announced a significant legal victory on October 23, 2007, stemming from a stock option backdating class action lawsuit. The United States District Court for the Central District of California granted the company's and its officers' and directors' motions to dismiss the consolidated complaint with prejudice and entered final judgment in favor of the defendants. This dismissal indicates that the court found no adequate pleading of federal securities law violations, including material misstatements, fraudulent intent, or a causal link between alleged unlawful conduct and investor losses. Furthermore, the company had previously disclosed that the Securities and Exchange Commission closed its informal inquiry into the company's stock option practices in August 2007 without taking any action. These developments represent a positive resolution to significant legal overhangs for the company.
Key Highlights
- 1The company (then Hansen Natural Corporation) obtained a dismissal with prejudice of a federal class action lawsuit alleging stock option backdating.
- 2The court found that the lawsuit's complaint failed to adequately plead violations of federal securities laws.
- 3Specifically, the court did not find sufficient evidence of material misstatements, backdating, fraudulent intent, or loss causation.
- 4Final judgment was entered in favor of the company and its officers and directors named as defendants.
- 5The Securities and Exchange Commission (SEC) had previously closed its informal inquiry into the company's stock option granting practices without taking action.
- 6This filing provides a resolution to previously disclosed litigation and regulatory scrutiny concerning stock option practices.