Table-game supplier Shuffle Master, Inc. has agreed to settle one of two groups of class-action shareholder lawsuits for million. The lawsuits, filed in 2007, alleged that Shuffle Master and certain officers had engaged in fraudulent accounting practices, including the improper recognition of revenue from inter-company inventory transfers, to mislead investors about measures being taken to improve internal accounting controls.
The shareholders alleged these practices inflated the company’s fourth-quarter 2006 earnings by nearly 50 percent and its full-year 2006 earnings by more than 30 percent.
Shuffle Master, which makes card shufflers and other equipment for casinos, was also accused of misleading investors about the success of Shuffle Master’s acquisition and integration of Australian slot supplier Stargames. The defendants in the suits are the company, the chief executive at the time, Mark Yoseloff, and the chief financial officer at the time, Richard Baldwin.
The defendants denied the allegations, in part claiming that the alleged misstatements concerning Shuffle Master’s acquisition of Stargames were protected as “forward-looking statements.” However, according to court records, the company has agreed to settle the cases for $13 million.
Attorneys for the lead plaintiffs, the City of Tulsa Municipal Employees Retirement Plan and the Oklahoma Firefighters Pension and Retirement System, said the settlement covers potentially thousands of purchasers of Shuffle Master common stock between February 1, 2006 and March 12, 2007. Shuffle Master insiders who purchased stock during this period are not eligible to receive payments from the settlement.