An investor of L3 Communications filed a lawsuit on behalf of investors of L-3 Communications Holdings, Inc. (NYSE:LLL) alleging breaches of fiduciary duties by the L-3 Communications Board of Directors in connection with an alleged e-mail surveillance of U.S. government employees and government contractors.
L-3 Communications Holdings, located in New York, is a prime system contractor in aircraft modernization and maintenance, command, control, communications, intelligence, surveillance and reconnaissance (C3ISR) systems, and government services. On June 4, 2010, L3 Communications received notice that its Integrated Systems’ Special Support Programs Division (“L-3 SSPD”, formerly known as L-3 Joint Operations Group or JOG) had been temporarily suspended from receiving new contracts or orders from U.S. Government agencies in connection with a governmental investigation into allegations that L-3 SSPD had inappropriately monitored e-mail messages on a Special Operations Forces Support Authority (“SOFSA”) computer network administered by L-3 SSPD. The Special Operations Forces Support Activity contract was largest contract in 2009. And while L-3 Communications Holdings announced that on July 27, 2010, L-3 Communications and the U.S. Air Force entered into an administrative agreement under which the Air Force lifted the temporary suspension and L-3 agreed, among other things, to provide periodic reporting to the Air Force regarding its ethics and compliance programs and not to protest the award of the follow-on SOFSA contract to a competitor, the sales loss associated with the SOFSA contract could cost L-3 as much as $150 million from its full year sales. L-3 Communications Holdings Total Revenue increased over the past three years from $13.961billion in 2007, to $14.901billion in 2008, and $15.615billion in 2009. Its Net Income increased from $740million in 2007 to $938million in 2008, but declined to $901million.

Shares of L-3 Communications Holdings, Inc. (LLL) over the same period lost from the 2007 high of $11.70 per share to as low as $63.93 during 2008, but eventually recovered in 2009 to $86.95 per share. L3 Communications shares were able to gain value in 2010 to its 52weekHigh of as high as $97.81 per in April 2010, but recently lost value and traded at $74.74 per share.