By Darrell Halen
StockerYale Inc., a manufacturing company based in Salem, has agreed to pay $3.4 million to settle a class-action lawsuit that accused it of misleading investors by issuing two fraudulent press releases in 2004.
According to documents at U.S. District Court for the District of New Hampshire in Concord, the plaintiff’s lawyers were awarded 33 percent, about $1.13 million, in fees and $51,111 in reimbursement of expenses.
The remainder will go to 10,900 class members, investors who bought StockerYale stock between April 19, 2004, and May 24, 2005.
StockerYale is a designer and manufacturer of light-emitting diodes (LEDs), fiber optic, structured light lasers, fluorescent illuminated technologies and other products, according to the lawsuit.
The suit named the company, chief executive officer Mark W. Blodgett and his father, Lawrence W. Blodgett, a company director, as defendants.
On April 19, 2004, the company announced through a press release that it had received an order from BAE Systems to supply lasers for an airborne military missile defense system.
Following the announcement, the company’s share price surged. Mark Blodgett sold more than $1.6 million worth of shares and Lawrence Blodgett sold more than $350,000 worth of shares, according to the lawsuit.
Another press release issued on April 21, 2004, providing additional information about the order, also caused share price to rise, the lawsuit said.
The share price later decreased significantly, according to a published report.
The Securities and Exchange Commission investigated the company and settled a fraud case against it and Mark Blodgett in 2005.
“Specifically the complaint stated that StockerYale did not have any contract with BAE Systems for the development of a laser for missile countermeasure systems for commercial airplanes as part of the Homeland Security project,” the lawsuit said. “Nor was StockerYale developing such a system.”
Mark Blodgett agreed to pay disgorgement of $788,118 and a $120,000 civil penalty. He and the company did not admit to wrongdoing, have defended the press releases as accurate and have denied the plaintiffs’ charges in the class-action suit, according to a published report.