JACKSONVILLE, Fla./ — CSX Corp. announced that a federal court in New York has issued an order preliminarily approving a settlement reached by all parties to a civil action brought by plaintiff, Deborah Donoghue, a shareholder of CSX, to recover so-called “short-swing” profits under Section 16(b) of the Securities Exchange Act of 1934 alleged to have been realized by defendants The Children’s Investment Fund and 3G Capital Partners LP in connection with their purchases and sales of CSX securities.
CSX is party to the suit in name only, which was brought for the benefit of CSX, the railroad said in a news release.
The parties filed the settlement with the court on Dec. 16, 2008. The court will hold a hearing on March 5 to determine whether to issue a final order approving the settlement and whether to award a fee to plaintiff’s counsel.
If approved, CSX will receive $10 million from TCI and $1 million from 3G and the defendants and their related parties will be released from claims of violations of Section 16(b) of the Securities Exchange Act. The settlement provides that counsel for the plaintiff will seek approval by the court for attorney’s fees and costs of up to $550,000, which will be paid from the proceeds of the settlement payable to CSX.