Berman Tabacco

Lernout and Hauspie

In re Lernout & Hauspie Securities Litigation, No. 1:00cv11589 (D. Mass.), and Quaak v. Dexia, S.A., No. 03-11566 (D. Mass.)

In these two related securities class actions, the firm and its co-lead counsel obtained settlements of more than $180 million, including $115 million from the auditors, one of the largest auditor settlements at the time. Both cases arose from a brazen, world-wide fraud at Lernout & Hauspie Speech Products, N.V., in which the software company allegedly booked fictitious revenues from shell companies that had been set up and financed by the company itself. In 2000, Lernout & Hauspie, a Belgium-based speech-recognition software developer, announced that it had overstated its revenues by a whopping 65%—$377 million. The company filed for bankruptcy protection in November of that year.

Facing twin obstacles of bankruptcy and foreign defendants, the firm and its co-lead counsel used innovative litigation strategies to achieve the excellent resolutions here. For example, the firm gained unprecedented access to the criminal files maintained by Belgian prosecutors, which provided additional testimony and support to bolster the class’ claims and overcame efforts by overseas defendants to use Belgian courts to hinder the fact-finding process, which required extensive cooperation with Belgian prosecutors, Belgian courts and foreign counsel.

Case Information

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