THIS CASE HAS BEEN SETTLED. PLEASE REVIEW THE FOLLOWING FOR DETAILS ABOUT THE SETTLEMENT:
The Settlement resolves federal securities law and other legal claims that were filed by investors against Inland Western and other individual and entity defendants in November 2007. Inland Western used over $4 billion of investor capital to acquire commercial real estate properties, including multi-tenant shopping centers. From its inception until mid-November 2007, Inland Western had no employees. Inland Western paid entities, which were affiliated with its officers and directors, to conduct its day-to-day business and manage its portfolio of properties.
The lawsuit concerned alleged violations of the federal securities laws and breaches of fiduciary duty by defendant Inland Western Retail Real Estate Trust, Inc. (“IWEST”) and certain of its directors, officers and affiliates, William Blair & Company, L.L.C. (“William Blair”), and KPMG LLP on behalf of a proposed class (“Class”) of Inland REIT’s shareholders who were entitled to vote on the Schedule 14A Proxy Statement (“Proxy”) that was filed with the Securities and Exchange Commission on September 10, 2007, which Proxy was alleged to be materially false and misleading. The Original Complaint was filed on November 1, 2007 by Chimicles & Tikellis LLP in the United States District Court for the Northern District of Illinois.
The lawsuit arose from Inland Western’s mid-2007 announcement that it would seek shareholder approval, which it received, to acquire these entities for 37.5 million shares of Inland Western stock having a deemed value of $375 million (“Internalization”). The lawsuit alleged, among other things, that Inland Western was paying too much for the Internalization, and that it had asked shareholders to ratify the deal based on false information about the price and value of the Internalization.
The Inland Western settlement requires the individuals who received the 37.5 million shares, to return 9 million of those shares (or 24% of them) back to Inland Western. At the time of the Internalization, the 37.5 million shares were valued at approximately $375 million; therefore, the return of 9 million shares equates to a $90 million reduction of the price paid for the Internalization. Under the facts of this lawsuit, the lowering of the amount paid by Inland Western and the return of the shares is directly tied to remedying the wrongdoing that was alleged in the lawsuit. Defendants have denied and continue to deny that they have committed any act or omission giving rise to any liability and/or committed any violation of law or act of negligence or misconduct. Defendants’ denial of liability appears in Section 8 of the Stipulation of Settlement.
On November 8, 2010, the Court held a hearing and granted final approval of the Settlement as fair, reasonable and adequate. The Court also granted an award of attorneys’ fees and reimbursement of expenses to Plaintiffs’ counsel who litigated the lawsuit. The Final Judgment and Order Granting Approval of the Settlement and the Order Granting an Award of Attorneys’ Fees and Reimbursement of Expenses are available below for your review.