Oak Insurer to Pay $33 Million in Holder Suit
The insurance company representing Oak Industries and several of its former officers and directors agreed Thursday to pay about $33 million to settle a class-action shareholder lawsuit that had accused the company and its management of securities fraud and negligence.
Following “marathon” closed-door bargaining sessions coordinated by U.S. Magistrate Harry R. McCue, Federal Insurance Co. agreed to deposit the settlement payment in an interest-bearing account by Aug. 15.
For the record:
12:00 a.m. May 17, 1986 FOR THE RECORD
Los Angeles Times Saturday May 17, 1986 Home Edition Business Part 4 Page 2 Column 4 Financial Desk 2 inches; 47 words Type of Material: Correction
The insurance company representing Oak Industries and several of its former officers and directors will pay more than $19 million to settle a class-action shareholder lawsuit, not nearly $33 million, as reported Friday. Oak already has paid $13.25 million to settle the case, and it will not be reimbursed by its insurance company.
San Diego-based Oak, once a high-flying media concern that has teetered on the brink of bankruptcy for the past year, last fall agreed to pay the shareholders $13.25 million to settle the class-action suit.
That settlement was combined with the shareholders’ claims against former Oak officers and directors earlier this year, after a federal judge in San Diego ruled that the company’s insurance policy also covered former management.
Federal Insurance Co. had attempted to rescind the policy, arguing that it had been defrauded into issuing the protection.
On Thursday, Federal Insurance agreed to pay $19 million to settle claims against the former officers and directors, who include former Chairman Everitt Carter, former President Raymond W. Peirce, former Chief Financial Officer Frank A. Astrologes and former general counsel Carl J. Bradshaw.
The lawsuits claimed that Oak and its management lied in its public financial disclosures and improperly used corporate funds to purchase perquisites for Carter.
Earlier Suit Settled
Earlier this year, the former officers and directors settled a civil lawsuit brought by the Securities and Exchange Commission, which alleged that the executives gave “false and misleading information” to shareholders in 1982 and 1983.
In a consent agreement, the former executives neither admitted nor denied any wrongdoing.
Oak signed a similar consent agreement with the SEC last June.
Attorney Michael Aguirre, representing Bradshaw, described the settlement as “fair . . . for all concerned.” Plaintiffs were represented by William Lerach, partner in charge of the San Diego office of Milberg, Weiss, Bershad, Specthrie & Lerach. He described the two-month-long negotiations as “marathon” sessions.
Current Oak Chairman E. L. McNeely could not be reached for comment
