The bizarre family feud that fueled a steep drop in Cree's (NASDAQ:CREE) market value took another twist today, driving the stock up as much as 17% in early trading.
Back in June, Eric Hunter -- co-founder and former CEO of the semiconductor company -- and his wife filed a $3.2 billion lawsuit against Cree and its chairman, Neal Hunter, who also happens to be Eric's brother. The suit alleged securities fraud and defamation, and claimed Neal threatened the Hunters in an attempt to keep them from reporting the wrongdoing to the SEC. Cree denied the allegations from the beginning, attributing the lawsuit to "personal and family matters." It did, however, form a committee of independent directors to investigate.
As time passed, reports about Eric's mental health began circulating. Then, he showed up at a court proceeding heavily medicated and with a black eye, claiming he was beaten by a family member as retribution for the lawsuit.
Today, Cree announced that the Hunters dismissed without prejudice the allegations of federal securities fraud and unfair or deceptive trade practices. What's more, its independent committee returned findings that there is no evidence to support any of the Hunters' claims.
It's not over yet, however. As attorney Michael Unti told reporters, "We're in no way trying to signal to the public that we've lost any confidence in our securities claims." Rather, Unti plans to join several other class-action lawsuits filed by shareholders in the wake of Eric's initial claims.
Though the stock has nearly doubled off its August low of $11.70, it's worth noting that the ongoing lawsuits will continue to provide plenty of distraction -- and tap valuable management resources as well.
