/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010807.mbx C L A S S A C T I O N R E P O R T E R Tuesday, August 7 2001, Vol. 3, No. 153 Headlines DIGITAL ISLAND: Marc Henzel Lodges Securities Suit In S.D. New York GRANT THORNTON: Carnegie International Seeks $2.1B Default Judgment HANDSPRING INC.: Cauley Geller Begins Suit Against IPO Underwriters INCO LIMITED: Ontario Residents Sue Company, Gov't Over Nickel In Soil MAGELLAN HEALTH: Faces Two RICO And ERISA Violations Suits In Missouri MCAFEE.COM: Cauley Geller Commences Suit Against Two IPO Underwriters MINNESOTA MINING: Reports $304 Million Breast Implant Claims Payment MPOWER: Stroock Initiates Novel 'Zone of Insolvency' Suit for Fir Tree NANOPHASE TECHNOLOGIES: Settles Remaining '97 Lawsuit For $800,000 NETRO CORPORATION: Cauley Geller Sue Two IPO Underwriters In S.D. NY NETZERO INC.: To Mount Vigorous Defense Against NY Shareholders Suits NORTHERN ILLINOIS: Faces Lawsuits Over Mercury-containing Regulators PEROT SYSTEMS: Marc Henzel Commences Securities Suit In S.D. New York PRO-FAC COOPERATIVE: Farmers Unite, File Suit For Recovery Of Losses STRATOS LIGHTWAVE: Marc Henzel Begins Securities Suit In S.D. New York TERRA NETWORKS: Marc Henzel Commences S.D. New York Securities Suit THEGLOBE.COM: Cauley Geller Starts Securities Suit In S.D. New York TICKETS.COM: Marc Henzel Brings Securities Suit In S.D. New York UNDERWRITERS LITIGATION: Stull Stull Sues Several IPO Underwriters * Compromise In Patients' Bill Of Rights To Eliminate 'Class Actions' ********* DIGITAL ISLAND: Marc Henzel Lodges Securities Suit In S.D. New York ------------------------------------------------------------------- The law firm of Marc S. Henzel lodged a class action lawsuit in the United States District Court for the Southern District of New York on behalf of purchasers of the securities of Digital Island Corporation (Nasdaq: ISLD) between June 29, 1999 and December 6, 2000, inclusive. The action is pending against defendants Bear Stearns & Co. Inc., Lehman Brothers, Inc. and BancBoston Robertson Stephens, Inc. The complaint alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about June 29, 1999, Digital Island commenced an initial public offering of 6,000,000 of its shares of common stock at an offering price of $10 per share. In connection therewith, Digital Island filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of Digital Island shares issued in connection with the Digital Island IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate Digital Island shares to those customers in the Digital Island IPO in exchange for which the customers agreed to purchase additional Digital Island shares in the aftermarket at pre-determined prices. As alleged in the complaint, the SEC is investigating underwriting practices in connection with several other initial public offerings. For more information, contact: The Law Offices of Marc S. Henzel by Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by Phone: (888) 643-6735 or (215) 625-9999 by Fax: (215) 440-9475 by E- mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 GRANT THORNTON: Carnegie International Seeks $2.1B Default Judgment ------------------------------------------------------------------- Carnegie International Corporation (OTC BB: CGYC), an Internet support and computer telephony holding company, said it has filed recently a motion in Baltimore City Circuit Court asking for a judgment in its favor in a $2.1 billion suit against Grant Thornton LLP, its former accounting firm. The motion alleges that J.W. Mike Starr, a senior partner and former director of risk management at Grant Thornton, "willfully, knowingly and intentionally destroyed Carnegie documents with the full understanding that litigation was imminent." The motion says that Starr admitted destroying the documents in a deposition given earlier in July in Chicago. Carnegie's motion says that, "Starr admitted that he deliberately destroyed the entire Carnegie file, including, among other things, e- mails, communications with Carnegie, and his contemporaneous notes of telephone calls, meetings with Carnegie management and the members of its Audit Committee." Carnegie originally filed suit against Grant Thornton in May 2000, claiming that the accounting firm had "caused omissions and misstatements" in filing Form 10SB and Form 10KSB for 1997 and 1998 made with the Security & Exchange Commission. That eight-count complaint accused Grant Thornton of fraudulent inducement, negligence, malpractice, breach of contract, excessive fees, breach of trust, intentional interference with business relations, and defamation, during the period between December of 1997 and October of 1999. Those filings, Carnegie's suit and motion allege, led to a "near catastrophic" drop in the trading price of the company's shares, a suspension in trading lasting more than a year, and, ultimately, de- listing by the American Stock Exchange. Trading in Carnegie shares resumed in May of 2000 on the NASDAQ Over-the-Counter Bulletin Board. HANDSPRING INC.: Cauley Geller Begins Suit Against IPO Underwriters ------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP recently commenced a class action in the United States District Court for the Southern District of New York on behalf of purchasers of Handspring, Inc. securities during the period between June 21, 2000 and December 6, 2000, inclusive. The complaint charges defendants Credit Suisse First Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about June 21, 2000, Handspring commenced an initial public offering of 10 million of its shares of common stock at an offering price of $20 per share. In connection therewith, Handspring filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of Handspring shares issued in connection with the Handspring IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate Handspring shares to those customers in the Handspring IPO in exchange for which the customers agreed to purchase additional Handspring shares in the aftermarket at pre-determined prices. As alleged in the complaint, the SEC is investigating underwriting practices in connection with several other initial public offerings. For additional information, contact: CAULEY GELLER BOWMAN & COATES, LLP through its Client Relations Department: Jackie Addison, Sue Null or Charlie Gastineau by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 (toll free) or by E-mail: info@classlawyer.com INCO LIMITED: Ontario Residents Sue Company, Gov't Over Nickel In Soil ---------------------------------------------------------------------- Residents of Port Colborne, Ontario have filed a class action lawsuit against the former Inco Limited refinery in Southern Ontario and the Ontario government over elevated levels of nickel found in the soil near the plant, according to a recent report by The Globe and Mail. The report said the nickel content in the soil is likely nickel oxide, a July study found. Health Canada, in 1994, declared nickel oxide to be a human carcinogen. Test results recently released indicate additional contamination in the Port Colborne community. Samples taken from a community center on the grounds of an old Inco recreation center and from a private residence a few blocks away from the site show levels higher than what the Ontario government considers safe for humans. Excessive lead exposure has been conclusively linked to serious health problems, affecting the body's nervous system and causing learning disabilities. Tests in the contaminated Port Colborne house, owned by Angie Desmarais, showed dust in the walls contained 5,410 parts per million of lead. According to the Ontario government, anything above 200 parts per million is hazardous to humans. Officials at Inco and Ontario's Environment Ministry could not be reached for comment. Inco Limited is the world's No.1 producer of nickel, supplying about a quarter of the world's nickel, the uses of which include the manufacture of steel. The Company also mines and processes copper (8% of sales), cobalt, and precious metals such as gold, silver, and platinum. Inco maintains principal mining operations in Canada and Indonesia. The company's processing operations include refineries in Canada and the United Kingdom; interests in refineries in Japan, Taiwan, and South Korea; and a joint venture in China. MAGELLAN HEALTH: Faces Two RICO And ERISA Violations Suits In Missouri ---------------------------------------------------------------------- Behavioral health industry leader Magellan Health Services, Inc. disclosed in a recent regulatory report to the Securities and Exchange Commission that it is facing two class action complaints in Missouri. The Company said the suits have been pending since October last year, and include as defendant, Magellan Behavioral Health, Inc., a subsidiary. According to the report, plaintiffs charge the company with violating the Racketeer Influenced and Corrupt Organization Act and the Employment Retirement Income Security Act of 1974. The suits are currently lodged in the United States District Court for the Eastern District of Missouri. The class representatives purport to bring the actions on behalf of a nationwide class of individuals whose behavioral health benefits have been provided, underwritten and/or arranged by the Company and its subsidiary since 1994. The complaints allege violations of RICO and ERISA arising out of the Defendants' alleged misrepresentations with respect to and failure to disclose its claims practices, the extent of the benefits coverage and other matters that cause the value of benefits to be less than the amount of premiums paid. "While the claim is in the initial stages and an outcome cannot be determined, the Company believes that the claims are without merit and intends to defend them vigorously," the SEC report said. Magellan Health Services serves more than 70 million people. MCAFEE.COM: Cauley Geller Commences Suit Against Two IPO Underwriters --------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP recently filed a class action in the United States District Court for the Southern District of New York on behalf of purchasers of McAfee.com, Corp. (MCAF) securities during the period between December 1, 1999 and December 6, 2000, inclusive. The complaint charges defendants Morgan Stanley & Co., Incorporated and FleetBoston Robertson Stephens, Inc. with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about December 1, 1999, McAfee commenced an initial public offering of 6.25 million of its shares of common stock at an offering price of $12 per share. In connection therewith, McAfee filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of McAfee shares issued in connection with the McAfee IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate McAfee shares to those customers in the McAfee IPO in exchange for which the customers agreed to purchase additional McAfee shares in the aftermarket at pre-determined prices. As alleged in the complaint, the SEC is investigating underwriting practices in connection with several other initial public offerings. For additional information, contact: CAULEY GELLER BOWMAN & COATES, LLP through its Client Relations Department: Jackie Addison, Sue Null or Charlie Gastineau by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 (toll free) or by E-mail: info@classlawyer.com MINNESOTA MINING: Reports $304 Million Breast Implant Claims Payment -------------------------------------------------------------------- Minnesota Mining and Manufacturing Company, better known as 3M, revealed in a latest SEC report that it has already paid $304 million in claims related to the "breast implant" Revised Settlement Program approved in 1995. The Company also said 90 percent of those who registered as claimants in the class action suits have already participated in the settlement program as of June 30, 2001. The company entered the business of manufacturing breast implants in 1977 by purchasing McGhan Medical Corporation. In recent years, several lawsuits were instituted against 3M and certain other companies alleging damages for personal injuries of various types resulting from defective breast implants. A June 2000 issue of the Class Action Reporter pegs the number of these suits at 2,752, with 36 claims, representing 8,751 individual claimants. The company's current best estimate of the amount to cover the cost and expense of the Revised Settlement Program and the cost and expense of resolving opt-out claims and recovering insurance proceeds (from inception of the litigation through June 30, 2001) is $1.2 billion. Minnesota Mining and Manufacturing Company (3M) makes everything from masking tape to asthma inhalers. Well-known brands manufactured by the Company include Scotchgard fabric protectors, Post-it Notes, Scotch-Brite scouring products, and Scotch tapes. The company operates in more than 60 countries. MPOWER: Stroock Initiates Novel 'Zone of Insolvency' Suit for Fir Tree ---------------------------------------------------------------------- Mpower Communications, Inc., is "operating in the vicinity of insolvency," Fir Tree Partners alleges, exposing its investment funds to "the risks of opportunistic behavior and [creating] conflicting duties for [Mpower's] directors." Fir Tree relates that it has made repeated attempts to engage Mpower and its directors in a dialogue to improve the telecommunication company's operations and balance sheet. Unfortunately, Fir Tree says, Mpower and its directors are putting their duty to out-of-the-money shareholders ahead of bondholders. To help steer Mpower and its directors in the right direction, Robert Lewin, Esq., and Michael Perlis, Esq., at Stroock & Stroock & Lavan, filed a lawsuit in the Supreme Court of the State of New York on Fir Tree's behalf seeking a determination and declaration that: (a) Mpower is insolvent or in the vicinity of insolvency; and (b) Mpower and its directors owe a fiduciary duty to Mpower's creditors which stands in preference to any duties owed to Mpower's shareholders. Mpower Holding Corporation is a competitive local exchange carrier. Mpower offers an integrated bundle of broadband data and voice communication services to small and medium-size business customers. In 1999 and 2000, Mpower raised over $310 million in incremental debt. In that boom-time, Mpower's stock rose to $51 per share. With a crushing $483 million debt load, and $65 million of negative cash flow, that stock plummeted to $0.72 per share on July 20, 2001. Fir Tree Partners is a New York City-based "value oriented investment firm that specialized in working in a collaborative manner with management teams to increase shareholder value." Between September 8, 2000 and February 22, 2001, Fir Tree bought $69.918 million of the Mpower's 13% Senior Notes due 2010. Mpower, Fir Tree complains, continues to deplete its cash balances to fund staggering operating losses. Mpower's assets are property of Mpower's creditors. While the officers, directors and venture capitalists who formed and ran these companies were able to enrich themselves during the market's good times, Fir Tree charges, they have failed to recognize that given the company's poor financial condition their obligations and fiduciary duties have shifted to the creditors whose cash is currently being spent in an effort to salvage the business. Fir Tree points to Mpower's recent filings with the Securities and Exchange Commission to show that Mpower's current financial condition places it in the vicinity of insolvency and Mpower will likely be unable to pay its noteholders, like Fir Tree, when its obligations come due. Specifically, Fir Tree sees that Mpower requires approximately $70 million per quarter to fund its operating losses and capital expenses. Given these losses and expenses, Mpower's cash is rapidly diminishing and, assuming there are no new sources of funding, will likely disappear over the next 12 months. While Mpower talks about a business plan that will make it EBITDA positive by the end of 2002, Fir Tree sees no provision to fund $61-$62 million in interest obligations and a capital expenditure budget of $50+ million. Most analysts Fir Tree has talked to project a $70-$150 million funding gap. Fir Tree notes that PricewaterhouseCoopers' review of Mpower's financial statements for the period ending March 31, 2001, does not show a technical insolvency based on the ratio of current assets to current liabilities. In fact, Mpower appears to have net assets of $324 million. However, on May 10, Mpower announced its intentions to write-off its $135 million in goodwill along with $65 million of additional charges. Given the fact that Mpower requires almost $70 million per quarter to fund its operating expenses, Mpower will be insolvent by September 30 if it is not already, Fir Tree contends. Moreover, on July 20, Mpower announced its intention to defer declaring the quarterly dividend on its Series D convertible preferred shares for the second straight quarter. Although permissible, Fir Tree sees this event as a further indication of Mpower's grim prospects. Over the past nine months, Messrs. Lewin and Perlis relate, Fir Tree's made repeated attempts to talk to Mpower and its directors in a dialogue about improving operations and the Company's balance sheet. Fir Tree has suggested several strategic alternatives available to the Company including: (1) a prepackaged bankruptcy in which Mpower could offer all bondholders (like Fir Tree) cash and the majority of Mpower's equity; (2) a liquidation or sale of Mpower in which Fir Tree and the other bondholders have legal priority over the preferred and equity holders; (3) a bondholder swap where Fir Tree and the other bondholders receive a package of cash, new bonds and equity, or (4) repurchasing bonds at a price reflecting a compromise of the value of the business and the bondholders' (including Fir Tree's) claim priority. "Mpower and its directors have refused in good faith to engage in this dialogue. Instead, Mpower and its directors are continuing to breach their fiduciary duties to its creditors by wasting Mpower's assets and further jeopardizing Fir Tree and other creditors' recovery of their investments. "The creditor's recovery goes down by more than $5 million per week as the company continues to incur staggering losses on a failed business plan endorsed by Mpower management and its directors," Fir Tree complains. Fir Tree tells the Court that an actual and justifiable controversy has arisen and now exists between the parties and within the jurisdiction of the Court relating to the parties' respective rights in connection with Mpower. A substantial dispute exists between Fir Tree, Mpower and its directors as to the duties, obligations and responsibilities owed by Mpower and its directors to Fir Tree, and if any obligation exists, in what amount or amounts and to which persons. Accordingly, Lewin and Perlis argue, "declaratory relief is appropriate...in light of the conflicting positions of the parties." Fir Tree desires a judicial determination of the parties' respective rights and obligations in connection with Fir Tree's interests in Mpower. The need for a judicial declaration is "necessary in light of Mpower's deteriorating financial condition and the repeated failure of Mpower's management and officers to cooperate with Fir Tree in favor of Mpower's shareholders," the Strook lawyers continue. NANOPHASE TECHNOLOGIES: Settles Remaining '97 Lawsuit For $800,000 ------------------------------------------------------------------ Nanophase Technologies Corporation (NANX) recently announced it has reached an oral agreement to settle the remaining securities class action lawsuit filed against it, its officers and directors, and the underwriters of the company's initial public offering of common stock for $800,000. The case is pending in the United States District Court for the Northern District of Illinois. Under the terms orally agreed upon, the tentative settlement will successfully resolve all claims against all defendants, alleging certain claims under the federal Securities Exchange Act of 1934 on behalf of certain former preferred shareholders whose shares of preferred stock were converted into common stock on or about the date of the initial public offering, as more fully described in the company's Annual Report on Form 10-K. The settlement is not an admission of liability by any party. The company anticipates that this settlement, including up to an additional $50,000 for the cost of settlement administration, will be funded by the company's directors and officers liability insurance, and that neither the settlement nor administration payments will have a material adverse effect on Nanophase's financial position or results of operations. The tentative settlement is subject to the parties preparing and signing a definitive Stipulation of Settlement, subsequent submission of that formal Stipulation to the court for preliminary approval, notice to settlement class members, and subsequent final judicial approval. The settlement will successfully resolve the last suit that arose from the company's initial public offering in 1997, as more fully described in the company's Annual Report on Form 10-K. "We believe that the decision to settle the remaining class action for amounts within insurance policy limits promotes our stockholders' best interests," said Joseph Cross, Nanophase's president and CEO. "The settlement will avoid any future distraction and enable us to concentrate exclusively on the company's business development and technology initiatives and planned progress toward increasing product revenues during the fourth quarter of 2001 and during 2002," he said. Nanophase Technologies Corporation provides engineered solutions utilizing nanocrystalline materials for a variety of industrial product applications. Using proprietary technology to produce nanocrystalline materials, the company creates products with unique performance attributes. The company's global customer base includes Fortune 500 companies. NETRO CORPORATION: Cauley Geller Sue Two IPO Underwriters In S.D. NY -------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP commenced a class action in the United States District Court for the Southern District of New York on behalf of purchasers of Netro Corporation securities during the period between August 18, 1999 and December 6, 2000, inclusive. The complaint charges defendants Merrill Lynch, Pierce, Fenner & Smith Incorporated and FleetBoston Robertson Stephens, Inc. with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about August 18, 1999, Netro commenced an initial public offering of 5 million of its shares of common stock at an offering price of $8 per share. In connection therewith, Netro filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of Netro shares issued in connection with the Netro IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate Netro shares to those customers in the Netro IPO in exchange for which the customers agreed to purchase additional Netro shares in the aftermarket at pre- determined prices. As alleged in the complaint, the SEC is investigating underwriting practices in connection with several other initial public offerings. For additional information, contact: CAULEY GELLER BOWMAN & COATES, LLP through its Client Relations Department: Jackie Addison, Sue Null or Charlie Gastineau by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 (toll free) or by E-mail: info@classlawyer.com NETZERO INC.: To Mount Vigorous Defense Against NY Shareholders Suits --------------------------------------------------------------------- Free Internet service provider Netzero, Inc. recently announced it will mount a vigorous defense against pending shareholders suits in New York. In the latest report to the Securities and Exchange Commission, the Company revealed eight suits currently lodged in the United States District Court for the Southern District of New York. The Company has not answered any of the complaints and no discovery has started, the report said. According to the report, the suits name as defendants Netzero and certain of its officers and directors alleging violations of the federal securities laws. The following complaints were brought as purported shareholder class actions under Sections 11 and 15 of the Securities Act of 1933: (i) Bernstein v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No. 01 CV 3358 (filed April 20, 2001); (ii) Greenbaum v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No 01 CV 3528 (filed April 26, 2001); (iii) Doner v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No 01 CV 3534 (filed April 26, 2001); (iv) Sanders v. NetZero. Inc. et al., United States District Court for the Southern District of New York Case No. 01 CV 3844 (filed May 7, 2001); (v) Peterson v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No. 01 CV 3948 (filed May 9, 2001); (vi) Williams v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No 01 CV 4309 (filed May 21, 2001); (vii) Grubin v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No 01 CV 4405 (filed May 22, 2001); (viii) Bernstein v. NetZero, Inc. et al., United States District Court for the Southern District of New York Case No 01 CV 4434 (filed May 23, 2001). The complaints generally allege the prospectus through which NetZero conducted its initial public offering in September 1999 was materially false and misleading because it failed to disclose, among other things, that: (a) the underwriters of NetZero's initial public offering had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of the restricted number of NetZero shares issued in connection with initial public offering; and (b) the underwriters had entered into agreements with customers whereby they agreed to allocate NetZero shares to those customers in the initial public offering in exchange for which the customers agreed to purchase additional NetZero shares in the aftermarket at pre-determined prices. The defendant underwriters include Goldman, Sachs and Co., as the lead underwriter in the offering, as well as Banc Boston Robertson Stephens, Inc. and Salomon Smith Barney, Inc. The Company expects more complaints containing similar allegations to be filed against it in the future. NetZero, which has agreed to merge with rival Juno Online Services, offers free Internet services in exchange for personal information, which is sold to advertisers that place targeted promotions on users' screens. The company has about 4 million active users. NORTHERN ILLINOIS: Faces Lawsuits Over Mercury-containing Regulators -------------------------------------------------------------------- Utility giant Northern Illinois Gas Company faces several private lawsuits and one class action complaint in the Circuit Court of Cook County. A recent Securities and Exchange Commission document reveals the suits are claiming a variety of "unquantified damages" allegedly cause by mercury-containing regulators. "At this stage in the litigation, it is not possible to estimate what liability, if any, may result to the company from these lawsuits," the report said. The gas utility has some 30,000 miles of mains and serves nearly 2 million residential, commercial, and industrial customers in Northern Illinois (except for Chicago). Taking advantage of deregulating markets, it has joined energy player Dynegy to market natural gas and electricity in the Midwest. PEROT SYSTEMS: Marc Henzel Commences Securities Suit In S.D. New York --------------------------------------------------------------------- The law firm of Marc S. Henzel brought a securities class action lawsuit in the United States District Court for the Southern District of New York on behalf all persons who acquired Perot Systems, Inc. (NYSE: PER) securities between February 2, 1999 and December 6, 2000. Named as defendants in the complaint are Perot Systems and the following executive officers of Perot Systems: Ross Perot and Terry Ashwill. The complaint also names as defendants the following underwriters of Perot Systems' initial public offering: (1) Morgan Stanley Dean Witter Inc., (2) Merrill Lynch, Pierce, Fenner & Smith Inc., (3) Warburg Dillon Read, LLC, and (4) Bear, Stearns & Co., Inc. The complaint charges defendants with violations of the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Perot Systems' initial public offering of 6.5 million shares of common stock at $16.00 per share that was completed on or about February 1, 2000. The complaint alleges that the Prospectus was false and misleading because it failed to disclose: (i) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Perot Systems shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Perot Systems shares in the after-market at pre-determined prices. For more details, contact: The Law Offices of Marc S. Henzel by Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by Phone: 888-643-6735 or 215-625-9999 by Fax: 215-440-9475 by E-mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 PRO-FAC COOPERATIVE: Farmers Unite, File Suit For Recovery Of Losses -------------------------------------------------------------------- A group of Willamette Valley vegetable growers, who say they were victimized by a New York food conglomerate's systematic fraud and deception, have turned to the legal system for help. The farmers, who lost millions of dollars, have filed a class action suit against New York-based Pro-Fac Cooperative, Inc. (Nasdaq: PFACP) and others for their misdeeds and calculated mismanagement of the Salem-based subsidiary, AgriFrozen. "I lost sleep, trust and most of my retirement fund," said Bob Dettwyler of Blue Line Farms, lead plaintiff in the case. "Many of my neighbors and fellow farmers lost a lot more and some could lose their farms." According to the farmers, Pro-Fac came into the Willamette Valley via its subsidiary AgriFrozen under false pretense by offering a fair and full price for the vegetable growers' crops. Instead, through a series of material omissions, they fraudulently induced the local growers into entering crop contracts and stock security agreements, and then took the farmers' crops, and refused to pay them the fair value of the crops and the stock. The suit further alleges that Pro-Fac then fled back to New York and slammed the door behind by closing down their Oregon frozen food processing operations. "At this point the farmers only recourse to proving what they allege, is to have a court pry open the New York conglomerate's records and to allow us to conduct a thorough investigation," explained Mike Williams, co-counsel for the farmers. "That is exactly what we are asking an Oregon judge to do," he said. In a move to protect itself from being held accountable, AgriFrozen recently filed for bankruptcy in a New York court. The farmer's class action asks for a recovery of all crop and stock losses, including economic damages of $50 million. STRATOS LIGHTWAVE: Marc Henzel Begins Securities Suit In S.D. New York ---------------------------------------------------------------------- The law firm of Marc S. Henzel lodged a securities class action lawsuit in the United States District Court for the Southern District of New York on behalf all persons who acquired Stratos Lightwave, Inc. (Nasdaq: STLW) securities between June 27, 2000 and December 6, 2000. Named as defendants in the complaint are Stratos Lightwave and the following executive officers of Stratos Lightwave: James W. McGinley and David A. Slack. The complaint also names as defendants the following underwriters of Stratos Lightwave's initial public offering: (1) Lehman Brothers Inc., (2) U.S. Bancorp Piper Jaffray Inc., (3) CIBC World Markets, Inc., and (4) Robert W. Baird & Co., Inc. The complaint charges defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Stratos Lightwave's initial public offering of 8.75 million shares of common stock at $21.00 per share that was completed on or about June 27, 2000. The complaint alleges the Prospectus was false and misleading because it failed to disclose: (i) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Stratos Lightwave shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Stratos Lightwave shares in the after-market at pre-determined prices. For more details, contact: The Law Offices of Marc S. Henzel by Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by Phone: 888-643-6735 or 215-625-9999 by Fax: 215-440-9475 by E-mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 TERRA NETWORKS: Marc Henzel Commences S.D. New York Securities Suit ------------------------------------------------------------------- The law firm of Marc S. Henzel commenced a securities class action lawsuit in the United States District Court for the Southern District of New York on behalf all persons who acquired Terra Networks, S.A. (Nasdaq: TRLY) securities between November 19, 1999 and December 6, 2000. Named as defendants in the complaint are Terra Networks and the following officers and directors of Terra Networks: (1) Juan Villalonga Navarro, (2) Juan Perea Saenz de Buruaga, (3) Cesareo Alierta Izuel, (4) Juan Rovira de Ossa, (5) Alberto Cortina de Alcocer, (6) Alejandro Junco de la Vega, (7) Francisco Moreno de Alboran, (8) Nelson P. Sirotsky, (9) Jose Maria Mas Millet and (10) Antonio de Esteban Quintana. The complaint also names as defendants the following underwriters of Terra Networks' initial public offering: (i) Goldman Sachs & Co., (ii) Credit Suisse First Boston Corporation, (iii) J.P. Morgan & Co., and (iv) Lehman Brothers, Inc. The complaint charges defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Terra Networks' initial public offering of 24,929,918 Ordinary Shares in the form of Ordinary Shares or American Depositary Shares at $13.41 per share that was completed on or about November 19, 1999. The complaint alleges that the Prospectus was false and misleading because it failed to disclose: (a) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Terra Networks shares in the IPO in exchange for exorbitant and undisclosed commissions; and (b) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Terra Networks shares in the after-market at pre-determined prices. For additional information, contact: The Law Offices of Marc S. Henzel by Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by Phone: (888) 643-6735 or (215) 625-9999 by Fax: (215) 440-9475 by E- mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 THEGLOBE.COM: Cauley Geller Starts Securities Suit In S.D. New York ------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP filed recently a class action in the United States District Court for the Southern District of New York on behalf of purchasers of TheGlobe.com, Inc. (OTC Bulletin Board: TGLO) securities during the period between November 12, 1998 and December 6, 2000, inclusive. The complaint charges defendants TheGlobe.com, Bear Stearns & Co. Inc., Michael Egan, Todd Krizelman, Stephen Paternot and Frank Joyce with violations of Sections 11, 12(a) (2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about November 12, 1998, TheGlobe.com commenced an initial public offering of 3.1 million of its shares of common stock at an offering price of $9.00 per share. In connection therewith, TheGlobe.com filed a registration statement, which incorporated a prospectus, with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (1) Bear Stearns had solicited and received excessive and undisclosed commissions from certain investors in exchange for which Bear Stearns allocated to those investors material portions of the restricted number of TheGlobe.com shares issued in connection with the TheGlobe.com IPO; and (ii) Bear Stearns had entered into agreements with customers whereby Bear Stearns agreed to allocate TheGlobe.com shares to those customers in the TheGlobe.com IPO in exchange for which the customers agreed to purchase additional TheGlobe.com shares in the aftermarket at pre-determined prices. For more details, contact: CAULEY GELLER BOWMAN & COATES, LLP through its Client Relations Department: Jackie Addison, Sue Null or Charlie Gastineau by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 (toll free) or by E-mail: info@classlawyer.com TICKETS.COM: Marc Henzel Brings Securities Suit In S.D. New York ---------------------------------------------------------------- The law firm of Marc S. Henzel filed a securities class action lawsuit in the United States District Court for the Southern District of New York on behalf all persons who acquired Tickets.com, Inc. (Nasdaq: TIXX) securities between November 3, 1999 and December 6, 2000. Named as defendants in the complaint are Tickets.com and the following executive officers of Tickets.com: (i) Ian Sym-Smith, (ii) W. Thomas Gimple, (iii) John M. Markovich, (iv) Michael R. Rodriquez, (v) James A. Caccavo, (vi) Christos M. Cotsakos, (vii) William E. Ford, (viii) Howard L. Morgan, (ix) Irvin E. Richter, and (x) Nicholas E. Sinacori. The complaint also names as defendants the following underwriters of Tickets.com's initial public offering: (a) Morgan Stanley & Co., Incorporated, (b) Credit Suisse First Boston Corporation, (c) SG Cowen Securities Corporation, (d) Morgan Stanley Dean Witter Online Inc., (e) E*Offering Corp., and (f) Wit Capital Corporation The complaint charges defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a Registration Statement and Prospectus that contained materially false and misleading information and failed to disclose material information. The Prospectus was issued in connection with Tickets.com's initial public offering of 6,700,000 shares of common stock at $12.50 per share that was completed on or about November 3, 1999. The complaint alleges the Prospectus was false and misleading because it failed to disclose: (1) the Underwriter Defendants' agreement with certain investors to provide them with significant amounts of restricted Tickets.com shares in the IPO in exchange for exorbitant and undisclosed commissions; and (2) the agreement between the Underwriter Defendants and certain of its customers whereby the Underwriter Defendants would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Tickets.com shares in the after-market at pre-determined prices. For further details, contact: The Law Offices of Marc S. Henzel by Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by Phone: (888) 643-6735 or (215) 625-9999 by Fax: (215) 440-9475 by E- mail: Mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 UNDERWRITERS LITIGATION: Stull Stull Sues Several IPO Underwriters ------------------------------------------------------------------ Stull, Stull & Brody filed recently class action lawsuits against several IPO underwriters, using as supporting documents recent articles that have appeared in The New York Times and The Wall Street Journal about investigations by the United States Justice Department and the Securities and Exchange Commission into the manipulation of IPOs. Among the underwriters named as defendants are: (i) Credit Suisse First Boston Corp., (ii) The Goldman Sachs Group, Inc., (iii) Lehman Brothers, Inc., (iv) Merrill Lynch, Pierce, Fenner & Smith, Inc., (v) Morgan Stanley Dean Witter & Co., (vi) BancBoston Robertson, Stephens, Inc., and (vii) Salomon Smith Barney, Inc. The lawsuits allege that defendants violated federal securities laws by issuing and selling common stock pursuant to the IPOs without disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had solicited and received excessive and undisclosed commissions from certain investors. Specifically, the complaints allege that in exchange for the excessive commissions, defendants allocated shares to customers at the IPO price. To receive the allocations (i.e., the ability to purchase shares) at the IPO price, the underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of IPO stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive the share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the IPO price and then selling it later for a profit at inflated aftermarket prices. Among the stocks alleged to have been manipulated were the shares of the following: (i) Aether Systems, Inc. (NASDAQ: AETH) for the class period between October 21, 1999 and June 15, 2001, inclusive; (ii) Digitas, Inc. (NASDAQ: DTAS) for the class period between March 13, 2000 and June 26, 2001, inclusive; (iii) Drkoop.com, Inc. (OTC BB: KOOP) for the class period between June 8, 1999 and December 6, 2000; and (iv) Drugstore.com, Inc. (NASDAQ: DSCM) for the class period between July 28, 1999 and June 15, 2001, inclusive. For more information, contact: Tzivia Brody, Esq. by calling Phone: 1- 800-337-4983 (toll free) by E-mail: SSBNY@aol.com by Fax: 212/490-2022 or by Mail: 6 East 45th Street, New York, NY 10017 * Compromise In Patients' Bill Of Rights To Eliminate 'Class Actions' --------------------------------------------------------------------- A close study of the compromise proposal to the Patients' Bill of Rights, which the House of Representatives endorsed recently, would seem to indicate that the concern fueling the White House's objections to earlier versions was based on the prospect of insurers' facing costly lawsuits, The Wall Street Journal said recently. According to the report, the "compromise" addressed the White House's concerns because rather than expanding the right to sue for all patients, the compromise would now override the efforts of some states to enact their own patient protections and also would eliminate future class action suits. This kind of suits have become a powerful vehicle in recent years enabling people of meager funds to participate in the legal system and claim rights for which, otherwise, they might only window-shop. The newspaper said the compromise could derail more than two-dozen pending suits seeking national class action status in U.S. District Court in Miami. One batch of those suits, filed on behalf of physicians nationwide, accuses health-maintenance organizations of civil racketeering and conspiracy to cut industry costs by reducing and delaying payments to doctors. Separately, another dozen class actions on behalf of HMO subscribers nationwide could be similarly derailed, possibly working the deprivation of participation in the legal system already described above. These class action lawsuits accuse the industry of fraud by using hidden financial incentives and penalties to providers to drive down the amount of care patients receive. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Larri-Nil Veloso and Lyndsey Resnick, Editors. Copyright 2001. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *