The complaint charged that between October 1999 and December 2000, in an effort to conceal from the investing public that the company was experiencing serious undisclosed problems in its optical networking business, Lucent misrepresented the demand for its optical networking products and engaged in a variety of improper accounting practices designed to artificially inflate Lucent's publicly reported financial results.
These practices were said to include booking hundreds of millions of dollars of revenue from phoney sales.
When the truth about the company's products became known and it was forced to issue financial restatements, the stock price plummeted, from a high during the relevant period of $84.19 to just $12.19. After the class period ended, Lucent's share price continued to erode, dropping to below $1 per share in late 2000.
The agreement announced yesterday would provide compensation for a record number of shareholders in a securities suit, and marks the second largest securities settlement in history.