/raid1/www/Hosts/bankrupt/CAR_Public/011121.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, November 21, 2001, Vol. 3, No. 228
Headlines
AEGIS REALTY: Suits Dismissed After Termination of POB Acquisition
APROPOS TECHNOLOGY: Marc Henzel Commences Securities Suit in N.D. IL
AUCTION HOUSES: Former Sotheby's CEO Says Taubman Plotted To Fix Prices
BEVERLY ENTERPRISES: Arkansas Federal Court Dismisses Securities Suit
COBALT GROUP: Merger With Cobalt Acquisition Expected This Month
ECHOSTAR DBS: Provisional Certification Granted To Consumer Fraud Suit
ENRON CORPORATION: Gold Bennett Initiates Securities Suit in S.D. TX
EXCHANGE APPLICATIONS: Sued For Securities Act Violations in MA, NY
FINITY HOLDINGS: Darren Quinn Initiates Securities Suit in S.D. CA
FORD MOTOR: Reaches Tentative Settlement In MI Discrimination Suit
LOGON AMERICA: Milberg Weiss Initiates Securities Suit in Rhode Island
METAWAVE COMMUNICATIONS: NY Securities Suit Not Viewed As Threat
MGM GRAND: Accused By African American Employees Of Discrimination
MICROSOFT CORPORATION: Settling Private Antitrust Suits For $1.1B
NESCO INC.: Stull Stull Initiates Securities Suit in N.D. Oklahoma
NETEASE.COM: Schiffrin Barroway Commence Securities Suit in S.D. NY
NEXTCARD INC.: Rabin Peckel Files Securities Suit in N.D. California
NEXTCARD INC.: Berman DeValerio Lodges Securities Suit in N.D. CA
PACKATEER INC.: Wolf Haldenstein Commences Securities Suit in S.D. NY
PRIME GROUP: Breach Of Fiduciary Duty Suit Due To Cadim Acquisition
PROVIDIAN FINANCIAL: Sued For Securities Violations In Various Courts
QWEST COMMUNICATIONS: Discovery Ongoing In Suit Vs. US WEST Merger
QWEST COMMUNICATIONS: Sued By Customers For Delay In Phone Service
QWEST COMMUNICATIONS: Sued For Securities Acts Violations in Colorado
RAYTHEON COMPANY: Requesting Dismissal Of Securities Suit in Idaho
REVLON INC.: Sued By Shareholders For Securities Laws Violations In NY
TIRE RECALL: Lawyers Move For Consolidation of Ford, Firestone Suits
TOBACCO LITIGATION: Oregon Woman Files Suit For Medical Monitoring
TRIAD HOSPITALS: Suit Dismissed As Tennessee Court Approves Settlement
VERSATEL TELECOM: Wolf Haldenstein Commences S.D. NY Securities Suit
VIGNETTE CORPORATION: Denies Claims In Securities Suits In S.D. NY
WISCONSIN: Public Schools Request Disabled Students' Suit Dismissal
WIT CAPITAL: Customers Sue For Fraud and Misrepresentation in DE, IL
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AEGIS REALTY: Suits Dismissed After Termination of POB Acquisition
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Three securities class actions filed against Aegis Realty Inc.
challenging its acquisition of property from P.O'B Montgomery and
Company (POB) were dismissed without prejudice last month.
The Company declared the suits "moot" after it terminated its plan to
acquire a portfolio of POB's 19 community shopping centers and several
retail development opportunities together with POB's on-going
development business.
The suits:
(1) PAUL V. THE RELATED COMPANIES, L.P., ET AL. filed on or about
February 8, 2001 in the New York Supreme Court, County of New
York,
(2) SCHNIPPER V. AEGIS REALTY, INC., ET AL., filed on or about
March 23,2001 in the Circuit Court for Montgomery County,
Maryland, and
(3) OPPORTUNITY PARTNERS, L.P. V. STUART J. BOESKY, ET AL. filed
on or about April 4,2001 in the Circuit Court of Baltimore
City, Maryland
challenged the proposed acquisition, alleging that Aegis breached its
fiduciary duties to its stockholders by committing to pay unwarranted
fees and other consideration to affiliates of POB and advisor Apollo
Real Estate.
On August 27, 2001, the Company announced that it had terminated by
mutual consent with the third party the transaction that is at issue in
each suit.
APROPOS TECHNOLOGY: Marc Henzel Commences Securities Suit in N.D. IL
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The Law Office of Marc S. Henzel initiated a securities class action on
behalf of purchasers of Apropos Technology, Inc. (NASDAQ:APRS) common
stock in its February 17, 2000 initial public offering or in the open
market during the period between February 17, 2000 through May 15,
2000, inclusive.
The suit, filed in the US District Court for the Northern District of
Illinois, Eastern Division, charges the Company, the Company's top
directors and the underwriters who helped take the Company public, with
violating Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.
Specifically, the complaint charges that the registration statement and
prospectus for the Company's IPO contained material misrepresentations
and omissions regarding the role that two of the Company's co-founders,
Patrick K. Brady and William W. Bach, played in Apropos at that time.
Specifically, it is alleged that the Company's prospectus
misrepresented that both Brady and Bach were active members of its
executive management team and the Company's most senior officers.
Brady was listed as "Chief Technology Officer" and Bach was listed as
"Vice President, Technology" when both had stopped playing important
roles within the Company months before the prospectus was issued.
It is further alleged that Apropos President and Chief Executive
Officer, Kevin G. Kerns had effectively pushed Brady out of the Company
after a power struggle that culminated in July 1999.
Brady no longer maintained a company office, had no employees who
reported to him, and had no further ongoing involvement in the daily
affairs of the Company.
Similarly, Kerns demoted Bach and stripped him of his managerial
responsibilities and involvement in shaping the Company's core
technology.
At the time of the IPO, Apropos' technology and development departments
were in disarray. Kerns, who took on the CTO's functions, attempted to
hire a replacement for Brady before the prospectus was issued, but was
unsuccessful.
Thereafter, both Brady and Bach were listed in the prospectus and
falsely portrayed as active participants in the executive management of
the Company and its senior technology officers.
The Company issued nearly 4 million shares of common stock, raising
more than $87 million, to thousands of investors based on offering
materials that falsely stated that the Company's founders who designed
its key technological product were managing the Company.
For more information, contact Marc S. Henzel by Mail: 273 Montgomery
Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: at (888) 643-6735
or (610) 660-8000 by Fax: (610) 660-8080 by E-mail: Mhenzel182@aol.com
or visit the firm's Website: http://members.aol.com/mhenzel182.
AUCTION HOUSES: Former Sotheby's CEO Says Taubman Plotted To Fix Prices
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Former Sotheby's chief, Diana Brooks took her turn to testify against
ex-boss A. Alfred Taubman in the class action accusing two of the
world's largest auction houses of fixing reseller prices.
Brooks testified that in 1933 she started meeting Christie's then-CEO
Christopher Davidge, to formulate a six-year scheme where the two
houses charged U.S. resellers $400 million in non-negotiable
commissions.
These meetings were allegedly commenced after an April 1993 meeting
with Taubman, where he told her his plans to take steps with then
Christie's Chairman, Sir Anthony Tennant to prop up profits in a
falling market.
Brooks also testified that during the meeting, Taubman showed her a
small paper where he wrote subjects of discussion with Tennant such as
pricing, guarantees the firms offered sellers and interest-free loans.
According to a Reuters report, Brooks said that she then met with
Davidge in a London Hotel dining room, in a parking lot at John F.
Kennedy Airport, and at her London and New York apartments.
The two executives formulated the reseller scheme and agreed to stop
bad-mouthing each other, publishing market share gains and pirating
each other's employees, Reuters reported.
In her testimony, Brooks said that Taubman and Tennant allegedly joined
forces to combat a weak market where auction houses cut fees charged to
sellers in desperate bids for business.
Last week, Davidge testified against Taubman, admitting that he lied to
Christie's board of directors and lawyers to hide the price-fixing
offenses of the two top auction houses.
Taubman, a 76-year-old real estate magnate, has maintained his
innocence. His lawyers have said that he would not waste the years of
hard work and destroy his reputation by participating in price fixing.
His lawyers also believe Brooks testified against her ex-boss to avoid
a prison sentence.
Brooks had earlier pleaded guilty to her role in the scheme, saying it
was a way to boost her own compensation. She has not been sentenced
yet but she told the jury that there is no guarantee that she will not
go to prison.
Taubman was indicted with Tennant in May of price-fixing from 1993 to
1999. If convicted in this case, he could face a maximum of three
years in prison.
BEVERLY ENTERPRISES: Arkansas Federal Court Dismisses Securities Suit
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Nursing home operator, Beverly Enterprises, Inc. prevailed as the U.S.
District Court for the Eastern District of Arkansas dismissed the
securities class action against it.
The Company had earlier entered agreements with the U.S. Department of
Justice and the Office of the Inspector General of the Department of
Health and Human Services. The two Departments settled their
investigations regarding the Company's allocation to the Medicare
program certain nursing labor costs in their skilled nursing facilities
from 1990 to 1998.
The agreements consist of:
(1) a Plea Agreement where one of the Company's subsidiaries pled
guilty to one count of mail fraud and 10 counts of making
false statements to Medicare and paid a criminal fine of
$5,000,000 during the first quarter of 2000;
(2) a Civil Settlement Agreement under which the Company paid the
federal government $25,000,000 during the first quarter of
2000 and reimbursed the federal government an additional
$145,000,000 through withholdings from its biweekly Medicare
periodic interim payments in equal installments through the
first quarter of 2008. The Company also agreed to resubmit
certain Medicare filings to reflect reduced labor costs
allocated to the Medicare program;
(3) a Corporate Integrity Agreement where the Company is required
to monitor, on an ongoing basis, its compliance with the
requirements of the federal healthcare programs; and
(4) an agreement concerning the disposition of 10 nursing
facilities, to which the Company complied by disposing seven
of the facilities during 2000 and three of the facilities
during the nine months ended September 30, 2001.
The suit arose from practices that were the subject of the agreements
and names as defendants the Company and certain of its officers.
The Plaintiffs filed a second amended complaint on September 9, 1999
that asserted claims under Section 10(b) (including Rule 10b-5
promulgated thereunder) and under Section 20 of the Securities Exchange
Act of 1934.
Beverly Enterprises filed a motion to dismiss the suit in October 1999,
which the Court granted last month, dismissing the suit with prejudice.
The plaintiffs have until this month to appeal this decision.
Due to the preliminary state of the suit and the fact the second
amended complaint does not allege damages with any specificity, the
Company is unable at this time to assess the suit's probable outcome or
the materiality of the risk of loss.
The Company believes it has acted lawfully with respect to plaintiff
investors.
COBALT GROUP: Merger With Cobalt Acquisition Expected This Month
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The Cobalt Group expects the merger agreement with Cobalt Acquisition
Corporation to be consummated this month as it has entered into a
settlement agreement in the class action challenging the merger.
The Company entered the plan of merger with Cobalt Acquisition, wholly
owned by Warburg, Pincus Equity Partners LP, in June 2001 and
immediately after, three class actions were commenced.
The suits, which were later consolidated, named the Company, Warburg
Pincus, and Cobalt Group's board of directors as defendants and
primarily alleged that the defendants breached their fiduciary duty.
The consolidated suit alleged:
(i) that the proposed merger consideration was grossly unfair and
inadequate,
(ii) that the defendants engaged in unfair dealing by allegedly
timing the merger proposal to take advantage of the
allegedly depressed market value of Cobalt's common stock,
(iii) that the defendants allegedly timed the announcement of the
proposed transaction to place an artificial lid on the market
price of Cobalt's common stock,
(iv) that the defendants had access to internal financial
information about Cobalt to which the plaintiffs were not
privy
and
(v) that the continuing shareholders allegedly had conflicts of
interest and as a result, allegedly acted to better their own
interests at the expense of the unaffiliated shareholders.
The suits, which further alleged breach of duty of candor, including
allegations that the defendants failed to adequately disclose all of
the material factors relating to the proposed merger and aiding and
abetting breach of fiduciary duty.
Early this month, both parties entered into a memorandum of
understanding where they agreed to settle the lawsuits, subject to
completion of definitive documentation and court approval.
As part of the settlement, Cobalt Group agreed to issue supplemental
disclosure to shareholders regarding the merger and to pay fees and
expenses of plaintiffs' counsel in the amount of $280,000.
ECHOSTAR DBS: Provisional Certification Granted To Consumer Fraud Suit
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The California State Superior Court gave provisional class
certification to a class action suit filed against satellite TV
provider Echostar DBS Corporation.
The suit relates to late fees and was commenced in May 2001 against the
Company. The suit alleges:
(1) unlawful, unfair and fraudulent business practices in
violation of California Business and Professions Code Section
17200 et seq.;
(2) false and misleading advertising in violation of California
Business and Professions Code Section 17500; and
(3) violation of the California Consumer Legal Remedies Act.
The Court granted the certification for an orderly exchange of
information and for mediation. The provisional certification order
specifies that the class shall be de-certified upon notice in the event
mediation does not resolve the dispute.
The Company has denied the allegations in the lawsuit and stated its
intent to vigorously defend against the suit in a filing with the
Securities and Exchange Commission.
ENRON CORPORATION: Gold Bennett Initiates Securities Suit in S.D. TX
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Gold Bennett Cera & Sidener LLP commenced a securities class action on
behalf of purchasers of Enron Corporation (NYSE:ENE) common stock
during the period of November 15, 1998 through November 8, 2001,
inclusive.
The suit is pending in the United States District Court Southern
District of Texas, Houston Division against the Company and certain of
its officers and directors.
The suit alleges that the defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder.
Specifically, the suit alleges that defendants misrepresented and/or
omitted to state material facts regarding Enron's business and
financial results to artificially inflate Company securities.
Last November 8, 2001, the Company shocked the investing public by
announcing that it would restate its financial results for 1997, 1998,
1999 and 2000, and the first two quarters of 2001 to correct accounting
irregularities which had caused the Company to overstate its net income
by hundreds of millions of dollars.
The Company also admitted that the audit reports, which had been issued
for its financial reports during those periods, could not be relied
upon.
As a result of the restatements, Enron was forced to reduce
shareholders' equity by $1.2 billion. Upon revelation of this news,
Company stock plummeted to $8.41 per share, down from a class period
high of approximately $90 per share.
For more information, contact Gwendolyn Giblin by Mail: 595 Market
Street, Suite 2300, San Francisco, California 94105 by Phone: 800-778-
1822 or 415-777-2230 by Fax: 415-777-5189 or by E-mail:
Enron@gbcsf.com.
EXCHANGE APPLICATIONS: Sued For Securities Act Violations in MA, NY
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Computer software provider, Exchange Applications, Inc. faces two
securities class actions filed on behalf of purchasers of the Company's
stock from December 9,1998 to September 29,2000.
One suit is pending in the U.S. District Court for the District of
Massachusetts against the Company, certain of its current and former
officers and its certified public accountants, Arthur Andersen, LLP.
The suit alleges the defendants made false or misleading statements
that inflated its common stock price during the class period.
The defendants have already filed a motion to dismiss the class action
suit, which it labeled as "without merit" in a disclosure to the
Securities and Exchange Commission.
Another class action was commenced in the United States District Court
for the Southern District of New York naming Exchange and defendants:
(1) BT Alex Brown, Inc.,
(2) Hambrecht & Quist, LLC,
(3) Adams, Harkness & Hill, Inc.,
(4) Sound-View Technology Group, Inc.,
(5) Andrew J. Frawley,
(6) John G. O'Brien,
(7) Jeffrey Horing,
(8) Ramanan Raghavendran,
(9) David G. Mcfarlane,
(10) Michael D. McGonagle,
(11) Patrick A. Mchugh, and
(12) N. Wayne Townsend
The suit, also filed on behalf of purchasers of Company stock from
December 9, 1998 through December 6, 2000, alleges that documents filed
in connection with Exchange's initial and follow-on public offerings
were materially false and misleading because they failed to disclose
that:
(1) the underwriters solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which the underwriter allocated to those investors material
portions of the restricted stock issued in connection with the
offerings; and
(2) the underwriters had entered into agreements with customers
whereby they agreed to allocate the Company's shares to those
customers in the offerings in exchange for which the customers
agreed to purchase additional shares in the after-market at
pre-determined prices
Exchange believes the allegations are without merit.
FINITY HOLDINGS: Darren Quinn Initiates Securities Suit in S.D. CA
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Darren J. Quinn commenced a securities class action on behalf of
purchasers of the securities of Finity Holdings, Inc. (OTCBB:FNTY)
formerly known as Columbia Capital Corp. (CLK) between October 27, 1997
through November 12, 1999 inclusive.
The action, is pending in the United States District Court for the
Southern District of California against the Company and :
(1) Finity Corporation (formerly known as First Independent
Computers Corp.),
(2) Douglas R. Baetz,
(3) Glenn M. Gallant,
(4) Chuck LaMontagne, and
(5) Kenneth Klotz
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between October 27, 1997 and November 12,
1999.
The complaint also alleges:
(i) violation of California Corporations Code ss.25400,
(ii) violation of the Racketeer Influenced Corrupt Organizations
Act,
(iii) Fraud,
(iv) Conspiracy,
(v) Negligence,
(vi) Negligent Misrepresentation and
(vii) violation of California Business & Professions Code ss.17200.
At the beginning of the Class Period, Finity, a subsidiary of Finity
Holdings, Inc. announced that it had signed a processing contract with
BestBank, Boulder, Colorado, to process BestBank's credit card
portfolios.
The value of that contract was estimated to be approximately $12
million annually in processing revenue. Two days later, that estimate
was more than doubled to over $25 million in annual processing revenue.
Within a short time, the BestBank contract accounted for more than 92%
of credit card processing revenues.
The complaint alleges the BestBank credit card portfolio, however, was
worthless and/or fraudulent and defendants knew it and that, in fact,
defendants Baetz and Gallant indirectly controlled BestBank.
The FDIC took over BestBank in 1998, but credit card processing of
these worthless and/or fraudulent accounts continued. At the end of the
class period, defendants ceased representing that it would attempt to
collect $43.6 million from the FDIC pursuant to the BestBank processing
contract.
FORD MOTOR: Reaches Tentative Settlement In MI Discrimination Suit
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Ford Motor Company has reportedly reached a tentative settlement
agreement with current and former employees in the class action suit
charging the automobile giant with age and gender discrimination.
The suits were commenced early this year in the United States District
Court for the Eastern District of Michigan, alleging the Company
committed "reverse race, reverse gender and age discrimination."
Specifically, the suit alleges that Ford's Performance Management
Process favored younger, so-called "diversity" candidates and that the
system was intended to support the diversity initiatives by driving out
the older white males.
Under the system, employees were graded A, B, or C. Those receiving a C
could lose bonuses and raises, and two consecutive C grades could mean
dismissal. Initially, at least 10 percent of employees were to be
graded C, but that later was lowered to 5 percent.
In July, Ford said it would discontinue its 18-month-old system of
evaluating about 18,000 managers and replaced the letter system with
three designations: top achiever, achiever, and improvement required.
The tentative settlement was reached after strenuous negotiation, which
focused on the two class action suits. Negotiations in the individual
suits are also ongoing.
Attorney for the plaintiffs James Fett told SignOnSanDiego "Both Ford
and my clients know it is in the best interest of the company and all
employees to put this behind the Ford Motor Company."
However, Michael Pitt, the attorney for the larger of two class-action
lawsuits, denied the report that the two sides had reached a tentative
agreement to settle.
"There's no tentative agreement," he told Reuters. "There's no
settlement. The discussions are continuing. You know how settlements
go, sometimes they come to fruition, sometimes they don't."
Ford spokeswoman Anne Gattari said the company had no comment on the
negotiations, according to SignOnSanDiego.com.
LOGON AMERICA: Milberg Weiss Initiates Securities Suit in Rhode Island
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Milberg Weiss Bershad Hynes & Lerach LLP filed a securities class
action on behalf of purchasers of the securities of Log On America,
Inc. (NASDAQ: LOAX.BB) between April 22, 1999 and November 20, 2000,
inclusive.
The suit is pending in the United States District Court, District of
Rhode Island against the Company and defendants David R. Paolo and
Kenneth M. Cornell.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, by issuing materially false and misleading statements to
the market.
Specifically, throughout the class period, defendants repeatedly issued
statements indicating that, among other things, Logon was on track to
achieve the goals of its business plan and that it was successfully
growing its service offerings and customer base through its numerous
acquisitions.
The complaint alleges that these statements were materially false and
misleading because, among other things, they failed to disclose or
misrepresented:
(1) that the revenues the Company was generating from its customer
base, which was predominantly consumer-focused, were not
sufficient to offset the extensive capital costs that the
Company was incurring in order to build out its network and
provision its products;
(2) that the Company's "growth-by-acquisition" strategy was not
meeting with success as the Company had acquired a collection
of disparate businesses which it was unable to effectively
integrate into its existing business;
(3) that the Company was experiencing weakening demand for its
products and services and was attempting to transition into
different markets in order to reinvigorate its sales growth;
and
(5) that as a result of the foregoing adverse factors, the Company
would not be profitable in the near-term, if at all, and would
have to completely restructure its operations and slash costs
For more information, visit the firm's Website: www.milberg.com
METAWAVE COMMUNICATIONS: NY Securities Suit Not Viewed As Threat
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Metawave Communications Corporation believes that it has meritorious
defenses to the securities class action pending in the United States
District Court for the Southern District of New York.
The suit was commenced early this month against the Company, certain of
its officers and directors and the underwriters who handled its April
26, 2000 initial public offering of common stock.
The suit was filed on behalf of persons who purchased Metawave's common
stock during the time period beginning on April 26, 2000 and ending on
December 6, 2000.
The complaint alleges violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934 because of undisclosed compensation
received by the underwriters relating to the Company's IPO.
Metawave has yet to answer the suit but is confident that the
litigation will not have a material effect on its financial condition.
MGM GRAND: Accused By African American Employees Of Discrimination
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Current and former employees of MGM Grand Detroit Casino have filed a
class action suit in Wayne County Circuit Court, charging the casino
with racial discrimination.
According to The Detroit News, the suit contends that the workers faced
derogatory language and were unfairly paid, demoted, fired and passed
over for promotion.
Lawyer for the plaintiffs, Lynn Shecter told the Associated Press of
Yvette Nealy, the current executive secretary for the food and beverage
department who earns $34,000 a year, despite being the only executive
secretary with a college degree.
Nealy's white peers without degrees make $38,000 to $44,000.
According to Ursula Bradford-King, former executive secretary for the
personnel department, the Company considered the personnel department
"too black."
Brenda Jackson, a former slot machine attendant, said she was fired
after a gambler was overpaid by $800, but a white worker involved in
the incident wasn't fired, while Vincent Maxwell, a casino host,
charged that black customers aren't given the same amenities as white
customers.
The Company denies the allegations, saying they have a long-standing
commitment to providing a work environment where employees can succeed.
MICROSOFT CORPORATION: Settling Private Antitrust Suits For $1.1B
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Microsoft Corporation (NASDAQNM: MSFT) is on the verge of settling
about a hundred private lawsuits accusing the Company of charging
millions of people too much for computers and software.
The Company is ironing out the details of the settlement, which could
possible reach $1.1 billion, according to a Wall Street Journal online
report.
The software giant has reportedly agreed to give software and computers
to about 14,000 of the poorest U.S. schools over a five-year period, to
help resolve majority of its pending private class-action lawsuits.
Michael Hausfeld, one of the plaintiffs' lawyers, came forth with the
settlement, concluding that each of the 65 million computer buyers
represented would receive as little as $10 in a settlement or court
victory, the Journal said.
The deal has yet to gain the approval of U.S. District Judge Frederick
Motz of Baltimore. If approved, about 100 private antitrust claims
will be dropped.
According to a Reuters report, Microsoft representatives could not be
reached for comment. The Company had earlier reached a settlement with
the U.S. Justice Department.
NESCO INC.: Stull Stull Initiates Securities Suit in N.D. Oklahoma
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Stull Stull and Brody commenced a securities class action on behalf of
all persons or entities who purchased the common stock of Nesco, Inc.
(NASDAQ:NESC) between April 26, 2000 and August 16, 2001, inclusive.
The suit was commenced in the United States District Court for the
Northern District of Oklahoma against the Company and:
(1) Eddy L. Patterson,
(2) James Howell, and
(3) Larry Johnson
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities and Exchange Act of 1934 by issuing a series of
materially false and misleading statements about Nesco's quarterly and
annual financial results for 2000 and its quarterly financial results
for the first quarter of 2001.
At the close of the class period, the Company restated its revenues for
2000 and the first quarter of 2001 to adjust for $3.65 million in
overbooked sales.
The overbooked sales, which were the result of accounting
irregularities, forced the company to reduce its earnings for 2000 to
$588,000, or 6 cents a share, from the previously reported $2.85
million, or 31 cents per share.
The suit alleges that as a result of these false and misleading
statements the price of the Company's common stock was artificially
inflated throughout the class period.
For more details, contact Tzivia Brody by Mail: 6 East 45th Street, New
York, NY 10017 by Phone: 1-800-337-4983 (toll-free) by Fax: 212-490-
2022 or by E-mail: SSBNY@aol.com
NETEASE.COM: Schiffrin Barroway Commence Securities Suit in S.D. NY
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Schiffrin and Barroway LLP initiated a securities class action on
behalf of all purchasers of NetEase.com, Inc. (NASDAQ:NTESE) common
stock from July 3, 2000 through August 31, 2001, inclusive.
The suit, pending in the U.S. District Court for the Southern District
of New York, names as defendants the Company and:
(1) King F. Lai,
(2) William Lei Ding,
(3) Helen Haiwen He,
(4) Merrill Lynch, Pierce, Fenner & Smith, Incorporated,
(5) Deutsche Bank Securities, Inc.,
(6) Chase Securities, Inc.,
(7) Salomon Smith Barney, Inc. and
(8) UBS Warburg LLC
Specifically, the complaint alleges that the defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder.
The defendants allegedly issued a series of material misrepresentations
to the market between July 3, 2000 and August 31, 2001.
In May 2001, NetEase.com disclosed that it had discovered that $1
million in contracts had been improperly reported as revenue and as a
result, it would delay announcing its financial results for the first
quarter of 2001.
Subsequently, in June 2001, the Company announced that the revenue
overstatement appeared to affect its full year 2000 financial
statements and the amount of the overstatement would be approximately
$3 million.
Then, in August 2001, NetEase.com finally revealed the full extent of
the overstatement. The Company announced that it would be restating all
of its year 2000 financial statements because $4.3 million in revenue
had been overstated.
The suit alleges that the prospectus and registration statement issued
in connection with the initial public offering of the Company's
American Depositary Shares (ADSs) were materially false and misleading
because they contained artificially inflated financial results for the
first quarter of 2000.
Following the IPO, defendants issued press releases announcing the
NetEase's quarterly 2000 and full year 2000 financial results which
were materially false and misleading because they overstated the
Company's financial performance.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-
888-299-7706 (toll free) or 1-610-667-7706 or by E-mail: at
info@sbclasslaw.com
NEXTCARD INC.: Rabin Peckel Files Securities Suit in N.D. California
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Rabin and Peckel LLP initiated a securities class action on behalf of
all purchasers of NextCard, Inc. common stock (NASDAQ:NXCD) between
March 30, 2000 and October 30, 2001, both dates inclusive.
The suit, filed in the United States District Court for the Northern
District of California, names the Company and defendants:
(1) Jeremy R. Lent,
(2) John V. Hashman, and
(3) Bruce G. Rigione
The suit alleges that defendants violated Section 10(b) and 20(a) of
the Securities and Exchange Act of 1934 by issuing a series of
materially false and misleading statements about the Company's
financial results for fiscal 1999, 2000, and the first two quarters of
2001.
In particular, it is alleged that NextCard improperly classified
certain losses on loans as "fraud losses" rather than as "credit
losses" in order to avoid increasing its loan loss reserves thereby
enabling it to report gains on the securitization of credit card
receivables and maintain its "well capitalized" status.
The suit alleges that as a result of these false and misleading
statements the price of the Company's common stock was artificially
inflated throughout the class period.
This also enabled certain defendants and NextCard insiders to sell
their stock at artificially inflated prices for proceeds of
approximately $9 million.
For more information, contact Maurice Pesso or Eric Belfi by Mail: 275
Madison Avenue, New York, NY 10016 by Phone: (800) 497-8076 or (212)
682-1818 by Fax: (212) 682-1892 or by E-mail: email@rabinlaw.com.
NEXTCARD INC.: Berman DeValerio Lodges Securities Suit in N.D. CA
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Berman DeValerio Pease Tabacco Burt and Pucillo LLP commenced a
securities class action against NextCard, Inc. (Nasdaq: NXCD) alleging
the credit card company misled investors about the state of its
finances.
The lawsuit was filed in the U.S. District Court for the Northern
District of California against the Company and several top officers on
behalf of all investors who bought Company stock between March 30, 2000
and October 30, 2001.
The suit says that the defendants disseminated false and misleading
information about its capitalization in its filings with the Securities
and Exchange Commission for the 1999 and 2000 fiscal years and for part
of 2001.
The misleading statements concerned the company's wholly owned
subsidiary, NextBank, and its classification under federal banking
guidelines.
Though the company repeatedly described NextBank in SEC filings as
"well capitalized" during the class period, it was in fact
"significantly undercapitalized."
NextCard maintained this false "well-capitalized" status by improperly
classifying credit losses as fraud losses.
In the third quarter of 2001, federal regulators put an abrupt halt to
these misleading practices, forcing the company to reclassify its fraud
losses as credit losses and to increase its allowances for loan losses.
Once the credit losses were properly categorized, NextBank became
"significantly undercapitalized" - a full $140 million below the level
required for "well capitalized" status.
Last October 31, 2001, the Company revealed that it was unable to
provide the needed capital to NextBank and could no longer operate on
its own.
Stunned investors watched as the company's stock plummeted from a
closing price of $5.35 per share on October 30 to a closing price of
$0.87 the next day.
The complaint also alleges that one of the individual defendants,
NextCard co-founder Jeremy R. Lent, sold $7.5 million worth of stock in
illegal insider trades, along with an additional $8.2 million in
indirect stock held by the Lent Family Trust.
For more information, contact Alicia Duff or Jeffrey C. Block by Mail:
One Liberty Square Boston, MA 02109 by Phone: (800) 516-9926 by E-mail:
law@bermanesq.com or visit the firm's Website: www.bermanesq.com.
PACKATEER INC.: Wolf Haldenstein Commences Securities Suit in S.D. NY
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Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities
class action on behalf of purchasers of the securities of Packateer,
Inc. (Nasdaq: PKTR) between July 27, 1999 and December 6, 2000,
inclusive.
The action is pending in the United States District Court, Southern
District of New York against the Company, certain of its officers and
its underwriters, including:
(1) The Bear Stearns Companies Inc.,
(2) Dain Rauscher, Inc.,
(3) FleetBoston Robertson Stephens, Inc, and
(4) The Goldman Sachs Group, Inc.
The complaint alleges 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.
In July 1999, Packateer commenced an initial public offering of 4
million of its shares of common stock at an offering price of $15 per
share.
In connection therewith, the Company 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) the underwriters on the offering had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which those underwriters allocated to those
investors material portions of the restricted number of IPO
shares issued in connection with the IPO; and
(ii) the underwriters had entered into agreements with customers
whereby the underwriters agreed to allocate shares to those
customers in the IPO in exchange for which the customers
agreed to purchase additional shares in the aftermarket at
pre-determined prices.
For further information, contact Fred Taylor Isquith, Thomas Burt,
Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke by Mail:
270 Madison Avenue, New York, New York 10016 by Phone: (800) 575-0735
by E-mail: classmember@whafh.com or visit the firm's Website:
www.whafh.com. All e-mail correspondence should make reference to
PACKATEER.
PRIME GROUP: Breach Of Fiduciary Duty Suit Due To Cadim Acquisition
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Prime Group Realty Trust faces several class actions commenced in
various courts challenging the proposed acquisition of the Company by
Cadim Inc.
Cadim, Inc. is an affiliate of CDP Capital (Caisse de depot et
placement du Quebec) and the Prime Group, Inc., an affiliate of Michael
W. Reschke, the Chairman of the Board of the Company.
The class actions were filed in three state courts - the Circuit Court
for Baltimore City, Maryland, the Circuit Court for Montgomery County,
Maryland and the Circuit Court of Cook County (Chancery Division),
Illinois.
The suit names as defendants:
(1) the Company,
(2) its trustees,
(3) The Prime Group, Inc.,
(4) Cadim, Inc. and
(5) CDP Capital
The suit, filed on behalf of the Company's shareholders, alleges that:
(i) the potential acquisition would under compensate the Company's
shareholders for their common shares; and
(ii) that certain members of the Company's board of trustees
breached their fiduciary duties by allegedly engaging in a
scheme to acquire the Company's outstanding common shares at
an inadequate purchase price.
Cadim, Inc. subsequently withdrew its offer on October 23, 2001.
The Company and the other parties to these lawsuits agreed to halt
further proceedings until the possibility of a similar transaction is
definitively foreclosed.
The Company believes that each of the actions is without merit and
intends to vigorously defend itself against the plaintiffs' claims.
PROVIDIAN FINANCIAL: Sued For Securities Violations In Various Courts
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Credit card company, Providian Financial faces several securities class
actions and shareholder derivative suits filed in state and federal
courts, accusing the Company of unfair business practices.
The first suit is a consolidation of complaints filed in the United
States District Court for the Eastern District of New York
in June 1999.
The suit charges the Company and certain of its officers of making
false and misleading statements in violation of the federal securities
laws concerning its future prospects and financial results.
The suit was commenced on behalf of purchasers of the Providian's stock
between January 15, 1999 and May 26, 1999.
In February 2000, the suit was transferred to the Eastern District of
Pennsylvania, and an amended consolidation suit was later filed.
The Company moved to dismiss the suit in October 2000, but the court
denied the motion, allowing discovery in the case to proceed.
Three shareholder derivative suits were commenced in June 2000, two in
the California state court in San Francisco and one in Delaware state
court.
These actions seek redress against the members of Providian's board of
directors and certain executive officers for breach of their fiduciary
duties and for corporate waste arising out of their approval of, or
failure to prevent, alleged unfair business practices similar to the
ones at issue in the first suit.
The Company has not yet responded to these derivative suits.
QWEST COMMUNICATIONS: Discovery Ongoing In Suit Vs. US WEST Merger
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Discovery is now proceeding in an amended securities class action
pending against Qwest Communications, Inc. in the Denver federal court,
challenging the merger of the Company with US WEST.
The suit was commenced in January 2001 against the Company and certain
current and former officers and directors on behalf of stockholders of
US WEST.
The complaint alleges that Qwest has a duty to pay a quarterly dividend
to US WEST stockholders of record as of June 30, 2000.
The suit further alleges that the defendants' efforts to close the
merger in advance of the record date and their failure to pay the
dividend breaches fiduciary duties owed to US WEST stockholders.
In June 2000, the court rejected the plaintiffs' motion for a temporary
restraining order attempting to prevent the closing of the merger while
the Company asked the court to dismiss the suit.
The court denied the motion, allowing the discovery to commence.
The merger has also set a chain of class actions in various state and
federal courts:
(1) five class actions in Delaware State Court;
(2) two class actions in Delaware Federal District Court;
(3) twelve class actions in Colorado District Court.
There has been no discovery or activity in the above cases since they
were filed.
QWEST COMMUNICATIONS: Sued By Customers For Delay In Phone Service
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Telecommunications company Qwest Communications, Inc. settled for an
undisclosed amount seven class actions filed last September in various
state courts against the Company and US WEST.
The suits were filed on behalf of customers in Arizona, Colorado,
Minnesota, New Mexico, Oregon, Utah and Washington, alleging violations
of common law and statutory obligations.
The suits alleged that from 1993 to the present, US WEST willfully
delayed the provision of local telephone service to the purported
class members.
The suits further alleged that US WEST misrepresented the date on which
such local telephone service was to be provided to the purported class
members.
As of September 2001, the settlements have been approved by all of the
courts.
QWEST COMMUNICATIONS: Sued For Securities Acts Violations in Colorado
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Qwest Communications, Inc. faces seven securities class actions pending
in the US District Court for the District of Colorado on behalf of
purchasers of Company stock between March 22,2001 and July 23,2001.
The suits name as defendants the Company and:
(1) Joseph P. Nacchio, Chairman and Chief Executive Officer, and
(2) Robin R. Szeliga, Chief Financial Officer
One of the seven complaints has been voluntarily dismissed. The
remaining six complaints, which have been consolidated, allege that the
defendants made material false statements regarding the results of
operations for the quarter ended March 31, 2001.
In doing so, the defendants allegedly violated sections 10(b) and 20(a)
of the Securities Exchange Act of 1934.
The complaints also allege that Qwest's first quarter 2001 results and
the statements regarding those results were false and misleading due to
our alleged improper valuation of KPNQwest in
violation of generally accepted accounting principles.
The results were also false and misleading because the defendants
failed to disclose the following alleged facts:
(i) first quarter earnings were better than expected because of a
change in the discount rate used to calculate its pension
obligations;
(ii) the Company failed to properly "write-down" the value of its
holdings in KPNQwest;
(iii) the Company's aggressive use of capitalization to classify
interest and software development costs as assets rather than
expenses increased first quarter earnings; and
(iv) the Company's selling, general and administrative expenses
were 22% of sales, not due to tight expense controls but
to improper classification of selling, general and
administrative expenses as cost of sales.
The Court has appointed a lead plaintiff and lead counsel, but aside
from this development, there has been no discovery or other activity in
these cases.
RAYTHEON COMPANY: Requesting Dismissal Of Securities Suit in Idaho
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Aerospace and defense firm Raytheon Company (NYSE: RTN) will ask the
United States District Court for the District of Idaho to dismiss a
class action suit charging them with federal securities violations.
The suit was filed on behalf of all purchasers of Washington Group
International, Inc., formerly known as Morrison Knudsen Corporation,
during the period from April 17, 2000 through March 1, 2001.
The complaint charges the Company, and certain of its officers with
violations of sections 10(b) and 20 of the Securities Exchange Act of
1934.
The complaint alleges that during the class period, the company
deliberately misrepresented the true financial condition of its
Raytheon Engineers & Constructors (RE&C) division in order to sell this
division to Washington Group at an artificially inflated price.
On April 17, 2000, the Company and Washington Group each issued press
releases disclosing the sale of RE&C to Washington Group for a modest
cash price and Washington Group's assumption of RE&C's liabilities of
approximately $500 million.
The sales agreement, which was filed with the Securities and Exchange
Commission on the same day, detailed the transaction, including
Raytheon's promise to reimburse Washington Group for cost overruns from
certain projects.
The defendants allegedly issued misleading financial statements for
RE&C that failed to disclose massive cost overruns of approximately
$700 million that were known to exist at the time of the sale
transaction, but were not disclosed to investors.
On March 2, 2001, Washington Group announced that the Company was
refusing to honor its previously disclosed contractual commitments to
reimburse Washington Group for these massive cost overruns.
The Company says it has meritorious defense to these claims and expects
the hearing on the motion to be set in March 2002.
REVLON INC.: Sued By Shareholders For Securities Laws Violations In NY
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Cosmetics manufacturer Revlon, Inc. faces two securities class actions
pending in the United States District Court for the Southern District
of New York for alleged federal securities violations.
The first suit was consolidated from six class actions commenced in
April 2000 against Revlon, Inc., certain of its present and former
officers and directors and parent Company REV Holdings Inc.
The six suits similarly alleged violations of Rule 10b-5 under the
Securities Exchange Act of 1934.
The plaintiffs later filed an amended complaint, which consolidated all
of the actions and limited the class period to October 29, 1997 through
October 1, 1998.
Revlon asked the Court to dismiss the suit in June 2000 but the Court
denied the motion in substantial part in March 2001.
Another securities class action was commenced in September 2000 in the
same court on behalf of those purchased the securities of Revlon, Inc.,
and REV Holdings, between October 2, 1998 and September 30, 1999.
The complaint alleges that Revlon, Inc., certain of its present and
former officers and directors and REV Holdings violated Rule 10b-5
under the Securities Exchange Act of 1934.
On October 17, 2000 the Court ordered that this lawsuit be consolidated
with the first consolidated suit, but the plaintiffs moved for
reconsideration of this ruling.
Last August, the Court granted the plaintiffs' motion for
reconsideration and and agreed not to consolidate this lawsuit with
the first class action.
The Company intends to vigorously defend against the suits, labeling
them "without merit."
TIRE RECALL: Lawyers Move For Consolidation of Ford, Firestone Suits
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Lawyers for plaintiffs in individual lawsuits against Ford Motor
Company and Bridgestone/Firestone presented their arguments to
consolidate the suits into a single class action before US District
Court Judge Sarah Evans Barker.
The suits arose after federal regulators have linked 271 deaths and
more than 800 injuries to Firestone tires, many in accidents involving
Explorers that rolled over after deadly blowouts on U.S. highways.
The hearing had been scheduled to begin last month but was delayed
because U.S. District Judge Sarah Evans Barker wanted more time to
consider new information filed by the attorneys seeking to consolidate
the suits into a class action.
The lawyers must convince the judge that the plaintiffs have enough in
common to merit a class certification. If class-action status is
awarded, one main trial would be held in Indianapolis and the result
applied to all plaintiffs.
Judge Barker has yet to release her ruling on the matter.
TOBACCO LITIGATION: Oregon Woman Files Suit For Medical Monitoring
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Another class action seeking to force tobacco companies to pay for
medical tests for smokers was filed in Portland, Oregon last Monday.
The suit is substantially similar to the West Virginia medical
monitoring suit that was rejected by a jury last week.
Patsy Lowe, 61, quit a forty-year smoking habit. She asks the
Companies to pay for spiral computer tomography scans that could
allegedly detect lung cancer tumors at their earliest stages.
According to an Associated Press report, Lowe contends that cigarette
makers must help prevent any disease their product causes Oregonians.
In 1998, the tobacco industry forged a $246 billion settlement with
with Oregon and other states.
Bill Gaylord, Lowe's counsel, told Associated Press that scans
typically cost about $325, which likely will discourage many people
from asking for them.
Michael York, an attorney for Philip Morris, called the lawsuit "an
unorthodox legal claim, to say the least."
TRIAD HOSPITALS: Suit Dismissed As Tennessee Court Approves Settlement
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The Circuit Court of Davidson County, Tennessee approved the settlement
forged by parties in the securities class action filed against Triad
Hospitals, Inc. relating to its merger with Quorum Health Group.
The suit, filed on behalf of the stockholders of Quorum, charged the
Company and members of Quorum's Board of Directors, of breaching
fiduciary duties to Quorum and its stockholders by agreeing to an
unfairly priced merger.
The complaint sought an injunction preventing consummation of the
merger, or Triad's acquisition by or business combination with any
third party, until the Company adopted and implemented a procedure or
process, such as an auction, to obtain the highest possible price for
the Company's business.
In April 2001, the parties negotiated a settlement that would result in
the dismissal of the action. The Court approved the settlement last
month, therefore dismissing the suit in its entirety.
VERSATEL TELECOM: Wolf Haldenstein Commences S.D. NY Securities Suit
--------------------------------------------------------------------
Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities
class action on behalf of purchasers of the securities of Versatel
Telecom International N.V. (NASDAQ:VRSA) between July 23, 1999 and
December 6, 2000, inclusive.
The suit is pending in the United States District Court, Southern
District of New York against the Company, certain of its officers and
its underwriters, including:
(1) The Bear Stearns Companies Inc.,
(2) E*Trade Group, Inc.,
(3) Ing Barings LLC,
(4) J.P. Morgan Chase & Co.,
(5) Lehman Brothers Holdings Inc.,
(6) Paribas Corporation
The complaint alleges 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.
In July 1999, Versatel commenced an initial public offering of 21.25
million of its shares of common stock at an offering price of $10.51
per share.
In connection therewith, the Company 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) the underwriters on the offering had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which those underwriters allocated to those
investors material portions of the restricted number of IPO
shares issued in connection with the IPO; and
(ii) the underwriters had entered into agreements with customers
whereby the underwriters agreed to allocate shares to those
customers in the IPO in exchange for which the customers
agreed to purchase additional shares in the aftermarket at
pre-determined prices.
For more information, contact Fred Taylor Isquity, Thomas Burt, Michael
Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New
York, New York 10016 by Phone: (800) 575-0735 by E-mail:
classmember@whafh.com or visit the firm's Website: www.whafh.com. All
e-mail correspondence should make reference to VERSATEL.
VIGNETTE CORPORATION: Denies Claims In Securities Suits In S.D. NY
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Vignette Corporation strongly disputed allegations in the securities
class action filed against them in the United States District Court for
the Southern District of New York.
The suit was filed on behalf of purchasers of Company stock from
February 18,1999 to December 6,2000 relating to its February 1999
initial public offering and its December 1999 secondary public
offering.
The suit names as defendants Vignette, certain of its current and
former officers and directors and four underwriters involved in its
stock offerings:
(1) Morgan Stanley Dean Witter, Inc.,
(2) Hambrecht & Quist, LLC,
(3) Dain Rauscher Wessels and
(4) US Bancorp Pipper Jaffray, Inc.
The suit alleges 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.
The suit further alleges that the four underwriters awarded material
portions of the shares in Versatel's initial and secondary public
offerings to certain customers in exchange for excessive commissions.
The underwriters also allegedly engaged in "tie-in arrangements"
whereby certain customers were allocated shares of Company stock sold
in its offerings in exchange for an agreement to purchase additional
shares in the aftermarket at pre-determined prices.
The suit also alleges that Versatel and its officers and directors
failed to disclose the existence of these purported excessive
commissions and tie-in arrangements in the prospectus and registration
statement for the Company's offerings.
The Company believes that it has meritorious defenses to these
allegations and intends to vigorously defend itself against the suit.
WISCONSIN: Public Schools Request Disabled Students' Suit Dismissal
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Milwaukee Public Schools (MPS) and the state Department of Public
Instruction (DPI) have asked a federal court to dismiss a class action
lawsuit challenging the school's service for disabled students.
According to the Milwaukee Journal Sentinel, the suit contends MPS
serves disabled students so poorly that one 17-year-old boy was left to
watch "Teletubbies" instead of learning anything.
MPS admitted, in a court filing this week that the boy referred to has
cognitive disabilities and is one of its students, but denied every
allegation made in the lawsuit about how he was treated.
DPI and the school system also said the lawsuit should be thrown out of
court because the plaintiffs have not run out of avenues for getting
help without suing.
MPS said that, even if the suit goes forward, it should not be a class
action, because the intended class, disabled children in Milwaukee, is
not defined narrowly enough.
The non-profit Wisconsin Coalition for Advocacy put together the suit,
which, if certified as a class action, would cover more than 16,000
students in the 100,000 student district.
WIT CAPITAL: Customers Sue For Fraud and Misrepresentation in DE, IL
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Wit Capital Corporation faces two class action suits filed in Delaware
and Illinois by certain of the Company's customers, accusing the
Company of fraud, misrepresentation and unfair business practices.
The first suit, filed in Delaware Superior Court in and for New Castle
County, charges the Company with:
(1) breach of contract for alleged failure to comply with the
"anti-flipping policy" contained in the account agreement with
the Company's customers;
(2) breach of the implied covenant of good faith and fair dealing
by allegedly violating the anti-flipping policy and alleged
failure to "maintain adequate computer, communications,
personnel, accounting, bookkeeping, and/or other support
systems and facilities";
(3) fraud by reason of the fact that the Company allegedly
violated its own anti-flipping policy and our alleged first-
come/first-served policy in connection with IPOs;
(4) negligent misrepresentation in its method of allocation of
participation in IPOs;
(5) breach of fiduciary duty as a broker;
(6) negligence in handling accounts; and
(7) violation of Delaware's Consumer Fraud Act
In January 2001, the Court denied the plaintiffs' motion for class
certification, and in February 2001, entered an order dismissing the
action of the named parties as individual defendants in light of
the arbitration provision in the plaintiffs' customer agreements.
In March 2001, the plaintiffs appealed the Court's judgment, arguing
that it improperly denied class certification.
In November 2001, the Supreme Court of Delaware reversed the decision
of the lower court's denial of class status on the basis that the trial
judge did not allow enough discovery to determine if the necessary
elements to decide class status were present.
The case has been remanded to the State Court.
Another suit was commenced in the Circuit Court of Cook County
Illinois, charging WIT with:
(1) breach of contract for alleged failure to provide "continuous,
reliable trading services";
(2) breach of fiduciary duty and unjust enrichment by reason of
the fact that the Company allegedly failed to disclose
material facts concerning its system capacity and technical
capabilities and allegedly failed to "incorporate the latest
technological advances" into its systems relating to customer
account access and order placement;
(3) fraud by reason of the fact that the Company allegedly falsely
represented its technical capabilities relating to access to
its services;
(4) violation of the Illinois Consumer Fraud Act; and
(5) "negligent/intentional tort" by reason of the Company's
alleged failure to provide, upgrade and maintain systems to
enable customer order placement.
The suit was later transferred to the U.S. District Court for the
Northern District of Illinois. The plaintiffs tried to remand the case
back to state court, but their motion was denied.
The plaintiffs then amended its complaint to plead a violation of the
antifraud provision of the federal securities laws.
In January 2001, the federal court granted the Company's motion to
dismiss, granting leave for plaintiffs to replead their complaint.
Plaintiffs again filed an amended complaint, which WIT again moved to
dismiss. Plaintiffs then moved to reconsider the denial of the motion
to remand.
In October 2001, the plaintiffs' motion to remand back to state court
was granted.
WIT intends to vigorously defend these lawsuits and is confident that
the suits will not have a material adverse effect on them.
*********
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, Aurora Fatima
Antonio 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
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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
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