Harman Kardon 2009 Annual Report Download - page 39

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On November 30, 2007, the Boca Raton General Employees’ Pension Plan (the “Boca Raton Plaintiff”)
filed a purported class action lawsuit against Harman International and certain of our officers in the Court
seeking compensatory damages and costs on behalf of all persons who purchased our common stock between
April 26, 2007 and September 24, 2007. The allegations in the Boca Raton complaint are essentially identical to
the allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint
alleges claims for violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5 promulgated thereunder.
On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which
extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the
original complaint, Harman International also violated Sections 10(b) and 20(a) of the 1934 Act and Rule 10b-5
by “knowingly failing to disclose “significant problems” relating to its portable navigation device (“PND”) sales
forecasts, production, pricing, and inventory” prior to January 14, 2008. The amended complaint claimed that
when “Defendants revealed for the first time on January 14, 2008 that shifts in PND sales would adversely
impact earnings per share by more than $1.00 per share in fiscal 2008,” that led to a further decline in our share
value and additional losses to the plaintiff class.
On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action,
the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action
as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That
same day, the Court appointed Arkansas Public Retirement System as lead plaintiff (“Lead Plaintiff”) and
approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel.
On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick
Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc.
Securities Litigation.
On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the “Consolidated
Complaint”). The Consolidated Complaint, which extends the Class Period through February 5, 2008, contends
that Harman International and certain of our officers and directors violated Sections 10(b) and 20(a) of the 1934
Act and Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial
condition in fiscal year 2007 and fiscal year 2008. In particular, the Consolidated Complaint alleges that
defendants knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, PNDs and our
capital expenditures. The Consolidated Complaint alleges that when Harman’s true financial condition became
known to the market, the price of our common stock declined significantly, causing losses to the plaintiff class.
On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety. Lead Plaintiff
opposed the defendants’ motion to dismiss on September 2, 2008, and defendants filed a reply in further support
of their motion to dismiss on October 2, 2008. The motion is now fully briefed.
Patrick Russell v. Harman International Industries, Incorporated, et al.
Patrick Russell (the “Russell Plaintiff”) filed a complaint on December 7, 2007 in the United States District
Court for the District of Columbia and an amended purported putative class action complaint on June 2, 2008
against Harman International and certain of our officers and directors alleging violations of the Employee
Retirement Income Security Act of 1974 (“ERISA”) and seeking, on behalf of all participants in and
beneficiaries of the Harman International Industries, Incorporated Retirement Savings Plan (the “Plan”),
compensatory damages for losses to the Plan as well as injunctive relief, imposition of a constructive trust,
restitution, and other monetary relief. The amended complaint alleges that from April 26, 2007 to the present,
defendants failed to prudently and loyally manage the Plan’s assets, thereby breaching their fiduciary duties in
violation of ERISA, by causing the Plan to invest in our common stock notwithstanding that the stock allegedly
was “no longer a prudent investment for the Participants’ retirement savings.” The amended complaint further
claims that, during the Class Period, defendants failed to monitor the Plan fiduciaries, failed to provide the Plan
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