Just before the New Year's holiday weekend, news broke that Bill Ackman's hedge fund Pershing Square Capital Management and Valeant Pharmaceuticals International had agreed to a $290 million settlement with a class of investors. The suit was brought over allegations the hedge fund and pharmaceutical company engaged in insider trading during an attempted takeover of Botox manufacturer Allergan in 2014.

Plaintiffs claimed that Pershing Square and Valeant engaged in insider trading under securities laws that forbid the practice of “warehousing,” in which one party tips off another in advance of a tender offer.

Defendants argued before U.S. District Judge David Carter of the Central District of California in December that, since they were partners in the attempt to acquire the drugmaker, they were therefore allowed to trade on information.

Carter issued a tentative ruling favorable to the plaintiffs that found that the argument, if accepted, would “undermine the very purpose” of certain trading prohibitions during the process of a takeover, according to reports.

While the bid for Allegran was unsuccessful, both defendants walked away from the attempted takeover with substantial profits, according to reports.

Carter's tentative ruling kickstarted new negotiations between the parties, according to Kessler Topaz Meltzer & Check partner Lee Rudy who, along with attorneys for Bernstein Litowitz Berger & Grossmann, represented shareholders.

A final ruling—which Carter noted could potentially move away from the plaintiff-friendly tentative ruling depending on circumstances—was expected early in 2018. “There was a good reason for the parties to re-engage in settlement talks while that decision was pending,” Rudy said. “That decision was going to have a significant effect on what the trial was going to look like.”

At an earlier stage in the litigation, Valeant agreed that any settlement would see it pay 60 percent of the cost. In the final agreement, however, Valeant said that it would pay $96.25 million, or one-third. In a statement, Pershing Square said the defendants “had different views on the desirability and timing of settling the case, which previously prevented settlement,” and that the shift represented Pershing Square “[acquiring] control” of the situation.

“We continue to believe the case had absolutely no merit,” Ackman in a statement. “We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation.”

In a statement, Valeant chairman and CEO Joseph Papa said the settlement was also in the best interest of his company.

“Though we always have remained confident in our position and were prepared to try these cases on their merits, this agreement will eliminate disruption to our business,” he said.

For Rudy, the settlement represents a victory for investors.

“We feel like what Bill Ackman and Valeant did was a clear violation of the law,” he said. “We think that this substantial settlement is a significant remedy for that misconduct, and we expect that other market participants would be wise to think very carefully before engaging in a similar kind of scheme.”