Majesco reaches settlement in shareholder suit

Class-action shareholder suit resolved, but legal issues remain for Cooking Mama publisher.

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Last year, a group of Majesco Entertainment shareholders sued the company, saying former CEO Morris Sutton and his executive sons Jesse and Joseph were running the company exclusively for their own benefit. Today the Cooking Mama publisher announced that it has reached a settlement agreement in the case, putting one more of its legal troubles to rest.

As part of the settlement, Majesco is denying that it acted improperly but will give the plaintiffs roughly $2.5 million in cash and shares. That sum was chalked up as legal fees in the company's second-quarter results, announced in June.

"The company believes it is in its best interest to resolve these claims, in order to enable management to focus all of its efforts on executing its strategy and creating greater value for shareholders," the company said in a statement.

Majesco's woes began in mid-2005, after a downgraded financial forecast and the sudden resignation of then-CEO Carl Yankowski led to the stock shedding more than half its value in a single day. That was followed by a flood of shareholder lawsuits that has not yet abated.

In July, another investor filed suit against the company, saying he purchased more than a quarter of a million shares of Majesco stock for an artificially inflated sum of more than $3 million. As of press time, Majesco stock was trading up more than 2 percent to $1.35, meaning that shareholder's investment would be worth less than $368,000.

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