Flag Telecom Class Action Settlement Of Flag Telecom Securities Fraud Class Action Lawsuit

If you purchased the common stock of FLAG Telecom Holdings Limited (“FLAG”) between March 6, 2000 and February 13, 2002 or purchased FLAG common stock pursuant to or traceable to FLAG’s initial public offering (IPO) between February 11, 2000 and May 10, 2000, inclusive, and were damaged thereby and did not sell all of those shares prior to February 13, 2002, then you could get a payment from a class action settlement.

A class action settlement has been reached in a class action lawsuit pending in the United States District Court for the Southern District of New York against certain directors and officers (the “Individual Defendants”) of FLAG Telecom Holdings Limited (“FLAG”) a network services provider and independent carriers’ carrier (who provided products and services to the international telecommunications carrier community, application service providers, and Internet service providers) and Citigroup Global Markets Inc. f/k/a Salomon Smith Barney Inc. (“CGMI”) (successor to the investment banking firm which served as the lead underwriter of FLAG’s IPO) (collectively “Defendants”) alleging, among other things, that FLAG offered its shares to the general public in an Initial Public Offering IPO that commenced on February 11, 2000 and closed on February 16, 2000 and that in the IPO Prospectus and throughout the Class Period, the market for FLAG securities was misled about the revenue from and nature of FLAG’s presales relating to FA-1 system and sales, as well as demand for FLAG’s telecommunications bandwidth and the value of FLAG’s assets, all of which Plaintiffs allege misled investors about FLAG’s profitability, asset values, and demand for bandwidth, according to the FLAG Telecom securities class action settlement notice.

According to the Flag Telecom securities class action settlement notice, Plaintiffs alleged that the IPO Prospectus was misleading because, among other things, some of the $750 million in presales relating to FA-1 were “at cost,” and many were mere financing facilities rather than true presales, and therefore these presales were not true indicators of profit or demand and that certain Defendants (i) artificially and fraudulently inflated FLAG’s reported revenues and EBITDA during fiscal years 2000 and 2001 by causing FLAG to enter into reciprocal “swap” sales with its competitors, which did not need the capacity, and then immediately booking the revenue while amortizing the cost over time; (ii) failed to record an impairment to FLAG’s long-lived assets in a timely fashion; and (iii) made false and misleading statements about demand between April 24, 2001 and November 6, 2001.

The Flag Telecom securities class action settlement reportedly provides that the Individual Defendants agreed to create a $23.8 million settlement fund to be divided, after attorneys’ fees and expenses, among all settlement Class Members who send in valid Proofs of Claim, and CGMI agreed to create a $600,000 fund to be divided, after attorneys’ fees and expenses, among all settlement Class Members who purchased FLAG common stock pursuant to or traceable to FLAG’s IPO between February 11, 2000 and May 10, 2000, inclusive, and who were damaged thereby and send in valid Proofs of Claim.

The Court is scheduled to hold a Settlement Fairness Hearing at 2:00 p.m. on Friday, October 29, 2010, at the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007 , to consider among other things, whether the Settlement is fair, reasonable, and adequate.

For more information on the Flag Telecom Securities class action lawsuit settlement and potential settlement benefits and/or updates on the settlement, visit the Flag Telecom Securities class action settlement website:

www.flagtelecomsecuritiessettlement.com

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