(Updates with Goldman spokeswoman in seventh paragraph.)
June 29 (Bloomberg) -- Taser International Inc. and a group of shareholders settled a lawsuit against financial firms in which the stun-gun maker alleged stock-price manipulation through illegal short selling.
Both sides told a federal court in Atlanta they had reached a binding agreement. The judge yesterday put the case on hold pending the filing of a dismissal notice. The case was filed in 2008 against companies including Goldman Sachs Group Inc.
Terms of the settlement are confidential and won’t have to be approved by the judge, Steven Rosenwasser, a lawyer for Taser and about 40 of the company’s investors, said today in a telephone interview.
“After lengthy litigation, the plaintiffs are happy to have the case resolved,” Rosenwasser said.
In routine short selling, stocks are borrowed and then sold in anticipation of falling prices in hopes of repaying the loan with cheaper shares bought at a later date. The Taser investors accuse the brokerages of so-called naked short selling by placing electronic orders to sell shares without borrowing the corresponding shares or actually delivering them to the buyer.
The plaintiffs accused the firms of creating phantom or counterfeit Taser shares and diluting the value of authentic shares.
Goldman Sachs spokeswoman Andrea Raphael and Morgan Stanley & Co. spokesman Pen Pendleton declined to comment.
The case is Taser International v. Morgan Stanley, 10- 03108, U.S. District Court, Northern District of Georgia (Atlanta.)
--Editors: Charles Carter, Glenn Holdcraft
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