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HPE and Micro Focus shareholder class action settlement (Revised Jun 5, 2023; Updated Mar 5, 2024)

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[The official settlement site  gives this phone number: 1-855-604-1743 ]


HPAA payout estimate of $0.39 per MFGP "A" share.

Claim deadline extended to Jun 30, 2023.

May 10, 2023: New info and clarifications, based on comments from HPAA members:
- You may have Micro Focus (MFGP) stock from the 2017 HPE Software spinoff in multiple accounts.
- The
$6.43/share you were paid in Feb does not affect your right to claim under the settlement.
- How to deal with the Apr 2019 change from "A" to "B" shares.

Many current or former HPE stockholders have received one or more copies of a "Notice of Proposed Settlement of Class Action re Micro Focus International Securities Litigation" in postal mail.

The first notices were sent from the court-appointed Claims Administrator on Mar 5, 2023; another batch in early May. If you received several notices, you probably had MFGP shares in multiple accounts -- such as HP incentive plan accounts or personal brokerage accounts. The notices provide no clue as to which accounts or how many shares in each.

Claim deadline was May 30, 2023, now Jun 30, 2023.

Receipt of the paper notice is not necessary to file a claim. For individual investors, the effort and documentation required to claim may not be worth the effort.

(If you didn't get a copy, see "Documents" > "Settlement Notice" on the Claims Administrator's site: https://www.microfocusclassaction.com )

What happened, in chronological order:

1. Shares issued to HPE shareholders. If you owned any HPE stock on Sep 1, 2017, you received 13.7 American Depository Shares of a UK company, Micro Focus (MFGP) per 100 HPE shares. At the spinoff from HPE, the 222 million MFGP ADS shares were valued at $29.34/share. Since then, MFGP price has ranged as low as $1.25.

2. Cash payout.  Next, if you owned any MFGP stock on Apr 30, 2019, you received 0.8296 new MFGP "B" shares plus $4.30 cash, replacing each original "A" share, after Micro Focus sold the profitable SUSE Linux business.

3. Micro Focus bought by OpenText. If you owned any Micro Focus (MFGP) stock on Jan 31, 2023... All Micro Focus stock was bought for cash by OpenText at a 90% premium. MFGP stock was retired. Either $6.43 per MFGP "B" share was paid into your brokerage cash account or a check was mailed by Feb 14 2023. This does not affect your right to claim under the settlement, which is based on events from 2017 to 2019. (Previous history: https://www.hpalumni.org/StockMicroFocus )

4. Class action suit settlement. In 2018, several investors sued Micro Focus, HPE, and several individuals, alleging that they "...misrepresented and omitted material facts in the registration statements and prospectus..." If you received Micro Focus shares between Sep 1, 2017 and Aug 28, 2019 -- as part of the Sep 1, 2017 HPE Software spinoff or otherwise -- you have a potential claim in the expected settlement of a shareholder class action lawsuit. Even if you didn't get a notice in the mail. No matter when you disposed of the MFGP shares (even if you held them until they were purchased by OpenText in Jan 2023) Very rough estimate of average payout: $0.39 per MFGP "A" ADS -- i.e. $5.30 for every 100 HPE shares owned on Sep 1, 2017.

Who can claim:

"If you received Micro Focus ADSs or ADRs in connection with the September 2017 Merger, or otherwise purchased or acquired ADSs or ADRs, or the right to receive such ADSs or ADRs, between September 1, 2017 and August 28, 2019, inclusive, you are a Settlement Class Member..."

When:

Claim deadline was May 30, 2023, now Jun 30, 2023.

Fairness Hearing was June 27, 2023, now July 25, 2023, court hearing is scheduled to consider the settlement, the formula for allocating the settlement fund, and plaintiff attorney fees and expenses.

If you paid tax on the 2017 Micro Focus transaction, the cost basis for your MFGP stock should be reset to approx. $29.34/share, instead of being linked to the cost basis of your HPE stock. Be sure you note this in your own records (and in your broker's records, if your broker tracks cost basis) -- so that you don't pay tax twice on the same theoretical "gain."

How to claim:

1. Go to the Claims Administration site: https://www.microfocusclassaction.com   (If you have questions, you can call or email the Claims Administrator by clicking the "Contact" tab)

2. Click "Documents." The letter that some have received is the "Settlement Notice." Study the proposed payout allocation algorithm on page 4 of the Settlement Notice. "The calculation of each Loss Amount will depend upon several factors, including when Micro Focus ADSs/ADRs were purchased or otherwise acquired and in what amounts, as well as whether those securities were ever sold, and, if so, when they were sold and for what amounts..."

3. If you decide to claim, click "Start Your Claim." You will need to attach "Copies of broker confirmations or other documentation of your transactions in Micro Focus ADSs." References in your records to Deutsche Bank and AST (American Stock Transfer -- DB's transfer agent) refer to the same batch of shares.

   You may have had MFGP shares in multiple accounts -- such as HP incentive plan accounts or personal brokerage accounts. Member: "I had limited records for my closed Merrill “incentive” account from a few years ago, so I called them and they were able to print and mail the records I needed to make a claim online."

Members have found that brokerages, plan administrators, and transfer agents vary (sometimes dramatically) in how (or if) they track gain/loss and cost basis for the many complex HP-related stock events -- and what (if anything) they report to the IRS.

Issues reported by HPAA members:

- Fidelity stock issues: https://www.hpalumni.org/StockFidelity 

- Merrill Lynch issues: https://www.hpalumni.org/StockMerrillLynch  

- Morgan Stanley issues: https://www.hpalumni.org/StockMorganStanley  

- Schwab stock issues: https://www.hpalumni.org/StockSchwab 

- TDAmeritrade stock issues: https://www.hpalumni.org/StockTDAmeritrade 

- Vanguard stock issues: https://www.hpalumni.org/StockVanguardBrokerage

4. Missing info on Claim Form and instructions. None of the documents mentions the April 2019 change from "A" to "B" shares  (The "return of value" transaction. -- For each ADS share of MFGP owned on Apr 30, 2019, stockholders received 0.8296 "B" share of MFGP plus $4.30 cash.)  A member contacted the Claims Administrator about the issue and received this guidance...


Part II Sec. A.

- Report the number of Micro Focus ADS shares you acquired via the Sep 1, 2017 merger of Micro Focus with HPE Software.

- Provide supporting document, such as an account statement.

Part II Secs. B and C.

- Do not report the April 29, 2019 reverse stock split as a sale/purchase. Instead, provide a document showing the number of shares before and after the split.

- However, DO report other share purchases or sales between Sep 1, 2017 and Nov 26, 2019 and provide supporting documents.

Part II Sec D.

- Report your remaining post-split shares -- “Number of Micro Focus ADSs held at the close of trading on November 26, 2019.”

- Provide supporting document.

You may redact information unrelated to MFGP from your supporting documents -- but be sure to include an account statement cover page and all the MFGP details.

The claims administrator, Epiq, will contact you if they need additional information to process your claim.


FAQs

What's an ADS?  Micro Focus is based in the UK. An American Depositary Share (ADS or ADR) is a "U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange." Since Sep 2017, the MFGP depositary bank has been Deutsche Bank: https://www.adr.db.com/drwebrebrand/dr-universe/dr_details.html?identifier=11243

How much will I get? The total amount of the Settlement is $107.5 million. The case has been ongoing for five years and involved millions of pages of documents with 23 lawyers representing the plaintiffs, whose fees and expenses -- plus a contingency award -- will be paid from the settlement. Stipulation of Settlement at https://www.microfocusclassaction.com

How was the HPAA payout estimate of $0.39 per MFGP "A" share calculated? https://www.hpalumni.org/StockMicroFocusSuitDetails

Why two waves of notices? On Sep 1, 2017. the MFGP shares derived from Employee Stock Purchase shares registered at HPE's transfer agent (Wells Fargo Shareowner Services, now Equiniti) were registered at AST (American Stock Transfer) -- the US transfer agent for Micro Focus. The MFGP shares related to other accounts -- such as HP incentive plan accounts or personal brokerage accounts -- were placed in each corresponding account.

What is the April 2019 change from "A" to "B" shares?  (The "return of value" transaction.) (For each ADS share of MFGP owned on Apr 30, 2019, stockholders received 0.8296 "B" share of MFGP plus $4.30 cash.) See: https://www.hpalumni.org/StockMicroFocus

Who sued whom? In 2018, five investors and a pension fund sued Micro Focus, HPE, and several individuals -- the Micro Focus CEO, CFO, and board members, former HPE Software EVP Christopher Hsu, and HPE General Counsel and Secretary John Schultz -- alleging that they "...misrepresented and omitted material facts in the registration statements and prospectus..." Settlement Notice at https://www.microfocusclassaction.com

Anything illegal happen? "Defendants deny that they have violated any aspects of the securities laws of the United States, and there has been no finding of liability or wrongdoing by, on the part of, or against, any Defendant... This notice is not intended to express any opinion by the Court with respect to the truth of the allegations..." Settlement Notice

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