Oak Industries : Big Payout Due in Suit Over Drop in Stock’s Price

SAN DIEGO —  Checks totaling $25 million will be in the mail next month for 19,000 Oak Industries shareholders who lost money after the high-flying media company’s stock dropped in value from $35 per share to as low as $1 per share during the early 1980s.

The shareholders, plaintiffs in eight separate class-action suits that were later combined, will split $25 million of a $33-million cash settlement that was announced last year. The balance will go to attorneys representing the shareholders, said Keith Park, an attorney with the San Diego law firm of Milberg Weiss Bershad Specthrie & Lerach.

The suits accused Oak’s former management team of fraudulently inflating the value of Oak’s stock during the early 1980s. Those allegations prompted a lengthy Securities and Exchange Commission investigation, after which several former Oak managers agreed not to hold management positions in publicly traded companies.

The law firms representing the various class-action groups identified about 60,000 shareholders who held stock during the early 1980s when the alleged stock-price inflation took place. However, only 19,000 qualified for payments according to a complex formula, according to Park.

Those who lost money will receive 15 cents on the dollar, “which may seem low, but it really isn’t,” according to Park.

Oak last year agreed to end the class-action suit with a $13-million payment. Federal Insurance Co. of New Jersey subsequently agreed to pay more than $19 million to resolve the class-action suit. Checks will be mailed by Gilardi & Co., a Larkspur, Calif.-based accounting firm.