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CenturyLink Securities Litigation Settlement

The Class Action Case Files

Portfolio monitoring and asset recovery of growing global securities class actions can be daunting.
Broadridge can help simplify the complex.

Just the Facts

In a securities class action litigation that started in 2017, CenturyLink investors alleged that CenturyLink and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder by the SEC. Specifically, Plaintiffs alleged that Defendants made a series of materially false and misleading statements about CenturyLink’s financial condition and billing practices by misquoting prices and overbilling customers in a practice known as “cramming” in an effort to meet the financial projections that Defendants were representing to its investors. Through a series of corrective disclosures, CenturyLink’s improper billing practices were revealed to the investing public which caused CenturyLink’s common stock and senior notes to decline.

On September 14, 2020, the Court certified a Class of CenturyLink investors consisting of “all persons and entities that purchased or otherwise acquired publicly traded CenturyLink common stock or 7.60% Senior Notes due September 15, 2039 (“7.60% Notes”) during the period from March 1, 2013, through July 12, 2017, inclusive (the Class Period”), and who were damaged thereby.”

On March 18, 2021, the Court preliminarily approved a settlement of $55 million.  The claim filing deadline to participate in the settlement is August 13, 2021, and exclusions or objections must be received no later than June 29, 2021. A fairness hearing is scheduled for July 20, 2021.

Case Challenges

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Typically, most financial institutions only keep copies of statements, broker confirmation and house data relating to their accounts for 7 years. As such, given the length and the start of this Class Period, it is hard for a Class Member to (i) provide transaction information longer than 7-10 years and (ii) provide full supporting documentation that is required. The difficulties caused by older Class Periods can cause Class Members to miss eligible transactions, which negatively impacts potential recognized loss.

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The plan uses LIFO in the calculation, which applies a last-in-first-out principle and deems securities sold in the opposite order that they were purchased. This type of calculation is not typical in most securities actions. Claimants are responsible for calculating their own claims, and this calculation method can cause issues with determining the true last in and first out transactions. Even experienced Administrators have experienced issues with applying LIFO calculations inconsistently; professionals must apply additional care when calculating plans that use LIFO.

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This case involves multiple securities, CenturyLink common stock and 7.60% Senior Notes due September 15, 2039. Claimants' average recovery amounts differ depending on the type of security. This means that even after transactions have been identified as eligible, it takes additional work to make sure all data is populated properly, in the required filing format, prior to submitting claims. Otherwise, claimants risk not having their claims filed, having their claims rejected, or receiving reduced distribution amounts.

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The Court-approved Plan of Allocation was exceptionally complicated in several ways. The Plan is very specific and includes an artificial inflation table that requires Class Members or Administrators to make a “down to the minute” calculation as to when the claimants sold their common stock, then calculate the price impact that the three alleged corrective disclosures had. Complicated recognized loss calculations increase the amount of time and expertise necessary to accurately calculate each claim’s recognized loss amount. Incorrect calculations can ultimately lead to rejected claims and a decreased ability to accurately review and challenge Administrators’ determinations. This challenge can lead to a more complicated and involved review and quality assurance process to confirm the accuracy and completeness of the Administrator’s findings to ensure accurate recoveries for claimants.

Don’t leave money on the table. Let us advocate on your behalf to help you maximize your recoveries.

Reach out to a Broadridge representative today to determine your recovery eligibility.

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