Delphi former auditor agrees to pay $38.25 million in accounting lawsuit settlement

By Caroline Salls

Pittsburgh, Dec. 27 - Delphi Corp. former outside auditor Deloitte & Touche LLP has agreed in principle to settle claims against the auditing firm for $38.25 million in cash, according to a news release.

According to the release, the case arose from allegations of accounting improprieties at Delphi that forced the company on June 30, 2005 to restate its financial results for all fiscal periods dating back to 1999 and to reverse hundreds of millions of dollars in reported earnings during those periods.

The lead plaintiffs, including Teachers' Retirement System of Oklahoma, Public Employees' Retirement System of Mississippi, Raiffeisen Kapitalanlage Gesellschaft mbH and Stichting Pensioenfonds ABP, were appointed by a federal court in June 2005 to represent a proposed class of investors who acquired Delphi securities between March 7, 2000 and March 3, 2005.

The complaint asserted claims under the federal securities laws against Delphi, Deloitte, some Delphi officers and directors, the banks that underwrote Delphi's securities offerings and other entities.

Following extensive mediation, Deloitte and the lead plaintiffs reached an agreement under which Deloitte will pay $38.25 million to the class to settle all claims against Deloitte in the lawsuit.

The settlement is subject to approval by a federal judge in the Eastern District of Michigan.

According to the release, this settlement follows an earlier mediated settlement under which the lead plaintiffs could potentially receive at least $284 million from Delphi and its insurance carriers and its former banks to resolve all claims against Delphi and other defendants.

That settlement is subject to approval by the Eastern Michigan court and approval of Delphi's plan of reorganization by the U.S. Bankruptcy Court for the Southern District of New York.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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