/raid1/www/Hosts/bankrupt/CAR_Public/011219.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, December 19, 2001, Vol. 3, No. 247
Headlines
AETNA INC.: Marc Henzel Initiates Securities Suit in E.D. Pennsylvania
BANK ONE: $13M Securities Suit Settlement Granted Final Approval
CARIBINER INTERNATIONAL: $15M Securities Suit Settlement Approved
COMVERSE TECHNOLOGY: Labels Pending Securities Suits "Without Merit"
CORNING INC.: Rabin Peckel Commences Securities Suit in W.D. New York
DIGITAL IMPACT: Marc Henzel Commences Securities Suit in S.D. New York
EBT INTERNATIONAL: MA Court Approves Plaintiff's Motion To Dismiss Suit
GREAT BRITAIN: Government Backs Farmers Suit V. France Over Beef Ban
INSURANCE LITIGATION: MN Court Approves "General Relief" Settlement
KEITHLEY INSTRUMENTS: OH Court Dismisses Defendant From Securities Suit
LEGAL NOTICE: Brodsky Smith Reveals Class Periods For Securities Suits
LEXMARK INTERNATIONAL: Marc Henzel Commences Securities Suit in E.D. KY
LIBERATE TECHNOLOGIES: Marc Henzel Lodges Securities Suit in S.D. NY
MACROMEDIA INC.: Inks $48 Million California Securities Suit Settlement
METRICOM INC.: Marc Henzel Commences Securities Suit in N.D. California
NEBRASKA: State Rules Miscalculate Welfare Time Limits, Says Judge
NEW YORK: Federal Court Dismisses Securities Suit V. Bank of New York
OLYMPIC FINANCIAL: Court Approves $6.125M Securities Suit Settlement
OPTICAL CABLE: Bernstein Liebhard Commences Securities Suit in W.D. VA
SOUTHERN CALIFORNIA: Employees File Suit For Overdue Overtime Pay in CA
XO COMMUNICATIONS: Marc Henzel Commences Securities Suit in E.D. VA
XOMA LTD.: Marc Henzel Initiates Securities Suit in N.D. California
*********
AETNA INC.: Marc Henzel Initiates Securities Suit in E.D. Pennsylvania
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The Law Office of Marc S. Henzel initiated a securities class action in
the Eastern District of Pennsylvania on behalf all persons who
purchased and/or acquired Aetna, Inc. (NYSE: AET) common stock between
December 1, 2000 and April 9, 2001 against the Company and executive
officers William H. Donaldson and John W. Rowe.
The suit charges defendants with violations of sections 10(b) and 20(a)
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The suit alleges that during the class period, defendants
announced that they had reached a definitive agreement to sell the
Company's financial services and international businesses to ING Group
N.V. and, in an integrated transaction, that the Company planned to
spin-off its domestic healthcare and large case pensions businesses in
the form of New Aetna, to its shareholders.
The suit alleges that in order for this sale and spin off to be
successful, defendants misled the investing public by falsely
representing, among other things, that the New Aetna was implementing a
number of strategic and operative initiatives which addressed among
other things rising medical costs and improved the efficiency of the
operations.
In truth and in fact, the Company was experiencing escalating medical
costs due to a number of factors:
(1) significant problems in its overpayment of claims or paying
single claims multiple times;
(2) inadequate pricing for risk enrollment;
(3) adverse selection;
(4) provider reimbursement rates, contracting issues; and
(5) increased short term utilization.
Then, on April 10, 2001, before the market opened, the Company shocked
the investing community by announcing that its first quarter 2001
results were expected to be significantly lower than estimated as a
result of increased medical costs due to higher utilization of
healthcare services in the fourth quarter 2000 and the first quarter
2001.
The Company announced that it expected to record in the first quarter
approximately $90 million before tax of additional medical costs
related to services performed in prior periods, primarily the fourth
quarter 2000. The remainder reflected a fourth quarter commercial HMO
medical cost trend, based on current information, of approximately 13%,
compared to the 12% that was estimated previously.
As a result of this announcement, the price of the Company's common
stock dropped from $36.15 on April 9, 2001 to a low of $28.75 on April
10, 2001, a decrease of over 20% on heavy trading volume.
For more information, contact Marc S. Henzel by Mail: 273 Montgomery
Ave, Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 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.
BANK ONE: $13M Securities Suit Settlement Granted Final Approval
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Bank One, Texas N.A. gained final approval to a $13 million settlement
of a class action against the Company and Jonathan Boston, the former
principal of First Lenders Indemnity Corporation (FLIC). The lawsuit
was filed on behalf of all persons who purchased 10% nine-month
promissory notes issued by FLIC pursuant to the offering materials
entitled "Commercial Paper Placement Secure Income Growth 1."
The action alleged that the securities were actually a Ponzi scheme in
which funds received from later investors were used to repay earlier
investors. The offering materials named the Company as an indenture
trustee, and the action alleged that it either participated in or aided
and abetted the scheme. The action asserted claims for:
(1) violations of federal and state securities laws,
(2) breach of contract,
(3) breach of fiduciary duty,
(4) common-law fraud and
(5) negligence
It is not possible to estimate how much class members' recoveries will
be until claims are filed. All class members will be reimbursed on a
generally pro rata basis, determined by the percentage of the total
class loss suffered by each class members. Claim forms must be mailed
to the Claims Administrator and postmarked no later than December 10,
2001.
CARIBINER INTERNATIONAL: $15M Securities Suit Settlement Approved
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Caribiner International, Inc. has gained final approval to settle for
$15 million several class actions pending against it and certain of its
officers and directors for federal securities violations. The suits
were filed on behalf of stockholders who purchased the company's common
stock between June 12, 1997, and February 14, 2000.
The suits claimed that the defendants violated federal securities laws
by issuing a series of false or misleading press releases and other
statements regarding the company's financial condition and prospects,
as part of a scheme to artificially inflate the value of the company's
stock.
To participate in the settlement, a completed proof of claim postmarked
no later than December 5, 2001, must be mailed to the Claims
Administrator's office. The parties estimate that 28.4 million shares
of Company stock were traded during this time period, leading to a per-
share recovery of $0.53 before deductions for costs and attorneys fees.
COMVERSE TECHNOLOGY: Labels Pending Securities Suits "Without Merit"
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Comverse Technology, Inc. denies allegations in three securities class
actions, commenced in October 2001, against the Company and certain of
its executive officers. The suits were lodged in the United States
District Court for the Eastern District of New York on behalf of
purchasers of the Company's common stock between April 3, 2001 and July
10, 2001. The Company believes all claims in the complaints to be
"without merit."
The Company allegedly violated federal securities laws by issuing false
misleading statements regarding its financial condition as well as its
present and future business prospects. More specifically, in 1998 the
Company issued $250,000,000 worth of convertible subordinated
debentures at 4.5% that are due in 2005 and callable as early as July
2001. The debentures were convertible, at the option of the holder,
into shares of Company common stock or cash.
By April 2001, the telecom industry had become severely depressed, the
Federal Reserve continued to drop interest rates and the Company's
stock price was steadily eroding. Repaying the Company's outstanding
debt by converting it into shares rather than paying cash became a
paramount concern for defendants.
To effectuate this goal, defendants allegedly artificially inflated the
Company's stock price by issuing false and misleading statements
regarding the Company's revenues and new customer wins. Days after
announcing record results for the first quarter 2001, the Company
called for the redemption of its 4.5% debentures giving bondholders
until July 9, 2001 to convert their debt.
A day after the redemption deadline, and in stark contrast to their
prior representations, the Company shocked the market by issuing
earnings warnings on the next three quarters. The market reacted
harshly to the news with shares of the Company dropping 33% on heavy
volume, reaching its lowest trading level since March 1999.
CORNING INC.: Rabin Peckel Commences Securities Suit in W.D. New York
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Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the Western District of New York on behalf of
all persons or entities who purchased Corning, Inc. (NYSE:GLW) common
stock or zero coupon convertible debentures pursuant to a prospectus
declared effective on November 2, 2000, against the Company and certain
of its officers and directors.
The suit alleges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933 by issuing a materially false and
misleading registration statement and prospectus in connection with the
Company's offering of common stock and debentures in November 2000.
Specifically, the complaint alleges that the prospectus was materially
false and misleading, among other reasons, because:
(1) it stated that demand for the Company's products was robust;
(2) it omitted to disclose that the Company was amassing hundreds
of millions of dollars of obsolete inventory that would have
to be written-off; and
(3) given the foregoing, the projection of 25% earnings growth in
2001, contained in the prospectus, was lacking in a reasonable
basis at all times.
On July 10, 2001, the Company announced it was taking a $5.1 billion
charge primarily related to two recent acquisitions, that it would also
write-off $300 million in excess and obsolete inventory, and that it
would cut 1,000 jobs and close three plants. On July 25, 2001, the
Company reported a massive second-quarter loss of $4.76 billion, or
$5.13 per share. Shares closed that day at $13.77, down 80% from the
offering price.
For more information, contact Eric J. Belfi or Maurice Pesso by Mail:
275 Madison Avenue, New York, NY 10016 by Phone: 800.497.8076 or
212.682.1818 by Fax: 212.682.1892 by E-mail: email@rabinlaw.com or
visit the firm's Website: http://www.rabinlaw.com
DIGITAL IMPACT: Marc Henzel Commences Securities Suit in S.D. New York
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Southern District of New York on
behalf of purchasers of the securities of Digital Impact, Inc. (NASDAQ:
DIGI) between November 22, 1999 and December 6, 2000, inclusive.
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. In November 1999, the
Company commenced an initial public offering of 4,500,000 of its shares
of common stock at an offering price of $15.00 per share. In
connection therewith, the Company filed a registration statement, which
incorporated a prospectus with the SEC.
The suit further alleges that the prospectus was materially false and
misleading because it failed to disclose, among other things, that:
(i) the underwriter had solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which it allocated to those investors material portions of the
restricted number of shares issued in connection with the IPO;
and
(ii) the underwriter had entered into agreements with customers
whereby it 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 Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
EBT INTERNATIONAL: MA Court Approves Plaintiff's Motion To Dismiss Suit
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The United States District Court for the District of Massachusetts
approved plaintiffs' motion to dismiss the securities suit filed
against EBT International and certain of its officers and employees,
alleging federal securities violations, following the Company's
preliminary disclosure of revenues for the fiscal year 2000 fourth
quarter on February 1, 2000.
The suits asserted claims for violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and
Exchange Commission, as well as a claim for violation of Section 20(a)
of the Exchange Act.
In June 2000, the Court ordered that the actions be consolidated into
one lawsuit entitled In Re Inso Corporation Securities Litigation. The
plaintiffs then filed a consolidated amended complaint on February 21,
2001.
In April 2001, EBT filed a motion to dismiss the suit on the grounds
that the plaintiffs failed to state a claim under the relevant
securities laws. After receiving the Company's motion to dismiss, the
plaintiffs themselves moved to dismiss the lawsuit with prejudice. The
plaintiffs received no consideration for, and the Company assented to,
the dismissal.
GREAT BRITAIN: Government Backs Farmers' Suit V. France Over Beef Ban
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The British government recently pledged to support farmers seeking
compensation from the French government after the European Court of
Justice ruled France was breaking European Union law by refusing to
import British beef and ordered that country to remove its embargo, the
Financial Times recently reported.
Ian Gardiner, Deputy Director General of the National Farmers' Union,
said the union is launching a "class action on behalf of British
farmers" to seek compensation from the French government." Mr.
Gardiner said "We do believe this offer of advice from the British
government is very right and proper and extremely helpful. It is not
so much that the ban has done damage to British farmers and meat
exports; the question is trying to quantify what that damage is."
Elliot Morley, the Agriculture Minister, told Parliament that the
government would support farmers and businesses seeking compensation.
"There may well be UK (United Kingdom) companies.who wish to pursue
compensation. That is a matter for them, but.we will give any
assistance if they want to do that," Mr. Morley said. Margaret
Beckett, Secretary of State for the Environment, Food and Rural
Affairs, welcomed the verdict and called on the French to lift their
import ban at once.
France must now decide whether to end its unilateral embargo, imposed
due to fears that British beef may still harbor BSE, or "mad cow"
disease, or face the prospect of further action from the European
Commission, which could lead to huge fines. The French government said
it would not make a decision until it had studied the judgment and
analyzed the latest state of knowledge and measures being undertaken in
the United Kingdom (UK). "The decision will be based on
the.precautionary principle, which has consistently guided the
government's action in its public health policy."
The French government evidently plans to play for time, even though it
knows that it eventually will have to comply with the European Court's
judgment. Jean Glavany, Agriculture Minister, said that he would not
consider his next step until he meets with leaders of the French beef
industry on January 7th, 2002. There is no appeal, and the ruling
marks the beginning of the end of one of the most acrimonious episodes
in recent Anglo-French relations.
The Commission brought the case, supported by the UK, after France
upheld a unilateral embargo on British beef, even after the European
Union agreed in 1999 to allow some exports to resume. The worldwide
ban on UK beef exports was introduced in March 1996 when the UK
government announced a probable link between BSE and variant
Creutzfeldt-Jakob Disease, a fatal brain-wasting illness in humans.
INSURANCE LITIGATION: MN Court Approves "General Relief" Settlement
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Minnesota Federal Court granted final approval to the settlement of a
class action against several insurance companies filed on behalf of
certain persons who have, or had, an interest in a cash value life
insurance policy or deferred annuity contract issued by the Companies,
in force from January 1,1985 through February 29,2000.
The suit put at issue various alleged sales practices and
misrepresentations and allegations of violations of federal laws and
named as defendants:
(1) IDS Life Insurance Company,
(2) IDS Life Insurance Company of New York,
(3) American Centurion Life Assurance Company,
(4) American Enterprise Life Insurance Company, and
(5) American Partners Life Insurance Company
These insurance companies are all related to American Express Company.
Specifically, the settlement class consists of:
(i) all persons or entities who have or had an ownership interest
in a cash value life insurance policy issued by IDS Life
Insurance Company or IDS Life Insurance Company of New York as
a result of an individual sale at any time during the class
period;
(ii) all persons or entities who have or had an ownership interest
in an individual deferred annuity contract or participation
interest in a tax-qualified group deferred annuity contract
issued by any of the defendants, that was in force at any time
during the class period; and
(iii) all tax-qualified retirement plans or arrangements and persons
or entities acting on behalf of such a plan or arrangement and
its participants and beneficiaries that purchased, owned, held
or had any interest with respect to a group deferred annuity
contract issued by one of the defendants that was purchased to
fund or constitute all or part of a retirement plan or
arrangement and that was in force at any time during the class
period.
Specifically excluded from the settlement class are persons:
(a) who timely exclude themselves from the class;
(b) whose policies or annuity contracts were terminated by reason
of death, and, in the case of a policy, death benefits were
paid;
(c) whose policies or annuity contracts were not accepted or paid
for by the customer, or were returned to the issuer as part of
the exercise of a "free look" provision in either a life
insurance policy or annuity contract;
(d) whose policies or annuity contracts were rescinded as part of
a reissue of a new policy or annuity, or because of a material
misrepresentation on a policy or annuity application, or where
the policy or annuity was rescinded and the premiums and other
monies paid were returned to the policy or annuity owner;
(e) whose claims were the subject of a release signed while
represented by counsel settling a claim or dispute and
releasing the issuer from any further liability concerning
such policy or annuity; or
(f) who held term life insurance policies, graded premium whole
life insurance policies, immediate annuities, or deferred
annuities that were settled (that is, annuitized) prior to
January 1, 1985.
Class members will automatically receive what the settlement calls
"General Relief." The General Relief consists of an accidental death
benefit that provides for payment of a benefit upon due proof of the
accidental death within the prescribed coverage period of the person
designated as the "measuring life." The duration and amount of the
accidental death benefit will depend on such factors as whether it
relates to a tax-qualified annuity and the account value of or premiums
paid on an annuity, or the face amount of a policy, and the age of the
measuring life. The prescribed period will last up to three years.
For more information, contact the IDS Life Class Action Information
Center by Mail: P.O. Box 1602, Faribault MN 55021-1602 or by Phone:
1.800.433.5314 (or if you use TDD/TTY, 1.800.657.8808).
KEITHLEY INSTRUMENTS: OH Court Dismisses Defendant From Securities Suit
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The United States District Court for the Northern District of Ohio
dismissed one of the defendants from the pending securities suit
against Keithley Instruments and certain of its officers, alleging
federal securities violations.
The first suit was commenced in March 2001 against the Company and
Joseph P. Keithley, the Company's Chairman, President and Chief
Executive Officer, alleging violations of Section 10(b) and Section
20(a) of the Securities Exchange Act of 1934, as amended. The suit was
filed on behalf of all those who purchased Company stock between
January 18, 2001 and March 9, 2001.
The suit alleges that the Company, with the knowledge and assistance of
the individual defendant, made certain false and misleading statements
concerning the Company's business condition and prospects for the
second quarter of fiscal 2001, the three months ending March
31, 2001, during the class period. Six additional similar complaints
have been filed in the same court.
On July 23, 2001 the actions were consolidated and re-captioned In re:
Keithley Instruments, Inc., Securities Litigation. The plaintiffs later
filed an amended complaint that included additional factual allegations
and also named Gabriel Rosica, an officer of the Company, as a
defendant. On December 5, 2001, pursuant to an agreed order, Mr. Rosica
was dismissed from the case.
The Company will respond to all the allegations at the appropriate
time. Management believes that these lawsuits are without merit.
LEGAL NOTICE: Brodsky Smith Reveals Class Periods For Securities Suits
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Brodsky & Smith LLC revealed that these companies have pending class
action in federal courts across the country filed by various law firms
alleging violations of the federal and/or state securities laws.
Investigations of these securities law violations by Brodsky & Smith,
L.L.C. are underway for the corporations:
Corporation Class Period
Hayes Lemmerz, Inc. (NYSE:HAZ) 06-08-00 to 09-05-01
Log On America, Inc. (Nasdaq:LOAX) 04-22-99 to 11-20-00
Xoma, Ltd. (Nasdaq:XOMA) 05-24-01 to 10-04-01
Nesco, Inc. (Nasdaq:NESCO) 02-15-01 to 08-23-01
The courts have not certified the proposed investor classes. Until
certified, an investor is not represented. You have the right to be
represented and to participate as a plaintiff if you purchased the
above-named securities during the proposed class periods identified
above.
For more information, contact Evan J. Smith or Jason L. Brodsky by
Mail: 11 Bala Avenue, Suite 39, Bala Cynwyd, PA 19004 by Phone:
877.LEGAL90 (toll-free) or by E-mail: esmith@brodsky-smith.com. Please
indicate the name of the stock, quantity of shares purchased, name,
address, telephone number and facsimile number.
LEXMARK INTERNATIONAL: Marc Henzel Commences Securities Suit in E.D. KY
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The Law Office of Marc S. Henzel initiated a securities class action in
the United States District Court, Eastern District of Kentucky,
Lexington Division on behalf of purchasers of the securities of Lexmark
International, Incorporated (NYSE: LXK) between March 20, 2001 and
October 22, 2001, inclusive.
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 made
highly positive statements regarding the Company's financial results,
including strong sales and growth of its printers.
Despite unprecedented competition in the industry, the Company seemed
to be immune from market conditions, reporting quarter after quarter of
strong financial growth. Unbeknownst to the investing public, the
Company was plagued with an increasing backlog of unmarketable
inventory which defendants allegedly failed to properly account for in
its publicly reported financial results, causing the Company's
financial results to be overstated by at least $25 million during the
class period.
By failing to timely take a charge to earnings for the unmarketable
inventory, defendants and other Company insiders were able to divest
themselves of thousands of shares at prices well above $60 per share,
generating proceeds of over $8,000,000. On October 22, 2001, defendants
finally revealed the truth, indicating that the Company would record a
$25 to $35 million inventory write-down in the fourth quarter of fiscal
year 2001, and that it would have to undergo a major restructuring in
order to maintain its competitiveness.
In addition, instead of generating between 70-80 cents in earnings per
share for the fourth quarter of 2001, a figure defendants repeatedly
emphasized the Company would reach, defendants were forced to
drastically revise its fourth quarter earnings' guidance. As revealed
on October 22, 2001, defendants expected only 40-50 cents in earnings
per share for the fourth quarter of 2001, a far cry from what analysts
and the investing public were led to expect. In response to the
unexpected news, Company stock declined by over 11% to close at $44.77
per share, on extraordinarily high trading volume.
For more information, contact Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
LIBERATE TECHNOLOGIES: Marc Henzel Lodges Securities Suit in S.D. NY
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The Law Office of Marc S. Henzel filed a securities class action in the
United States District Court, Southern District of New York on behalf
of purchasers of the securities of Liberate Technologies, Inc. (NASDAQ:
LBRT) between July 28, 1999 and December 6, 2000, inclusive.
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. In July 1999, the
Company commenced an initial public offering of 6, 250,000 of its
shares of common stock at an offering price of $16 per share. In
connection therewith, the Company filed a registration statement, which
incorporated a prospectus with the SEC.
The suit further alleges that the prospectus was materially false and
misleading because it failed to disclose, among other things, that:
(i) the underwriters had solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which they allocated to those investors material portions of
the restricted number of shares issued in connection with the
IPO; and
(ii) the underwriters had entered into agreements with customers
whereby they 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 Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
MACROMEDIA INC.: Inks $48 Million California Securities Suit Settlement
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Parties in the consolidated class action against Internet technology
firm Macromedia, Inc. (NASDAQ: MACR) have reached a tentative $48
million settlement.
The suit was filed against the Company and certain of its officers and
directors on behalf of stockholders who purchased the company's common
stock between April 18, 1996, and January 9, 1997 and alleges the
defendants violated California state securities laws by issuing a
series of materially false and misleading public statements about,
among other things, the revenues, earnings and future business
prospects of the Company.
While the parties announced the proposed settlement on September 4,
2001, it will not be effective until it receives final approval from
the court. The court has scheduled a hearing on the matter for December
21, 2001.
METRICOM INC.: Marc Henzel Commences Securities Suit in N.D. California
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The Law Office of Marc S. Henzel initiated a securities class action in
the United States District Court for the Northern District of
California on behalf of all persons who purchased Metricom, Inc. common
stock between June 21, 1999 and July 2, 2001, inclusive.
The suit alleges that defendants violated Sections 11, 12, and 15 and
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,
by issuing a series of material misrepresentations to the market
between June 21, 1999 and July 2, 2001, thereby artificially inflating
the price of the Company's common stock.
Specifically, the complaint alleges that certain defendants, beginning
in June 1999, issued statements concerning the Company's business,
financial results and operations that failed to disclose, or only
partially disclosed, three material agreements with MCI WorldCom, Inc.
These material transactions were:
(i) a Reseller Agreement, executed June 20, 1999 (initially
disclosed to the public on November 5, 1999);
(ii) a Global Services Agreement, executed October 3, 2000, which
required the Company to pay to WorldCom substantial
"termination" fees; and
(iii) an Agreement whereby WorldCom was to supply selected
telecommunications equipment, office equipment, and related
office product to the Company.
Neither of the last two material agreements nor the creation of
substantial contingent liability were ever disclosed to the public.
In February 2000, the Company closed a secondary public offering of 5
million shares of its common stock, at a price to the public of $87 per
share. Many of the material terms of the operant Worldcom agreement
were not revealed to investors prior to the offering, nor were
corrective disclosures made as new information relating to the
agreements with Worldcom became known.
Additionally, although the Company's business plan and marketing
strategy were allegedly known to be flawed, certain defendants failed
to disclose that material fact to the public. Certain defendants also
disseminated materially false and misleading statements, which
manipulated and artificially inflated the Company's common stock price.
These knowingly false and misleading statements drove stock from $11.06
per share near the beginning of the class period to as high as $109.50
per share on January 28, 2000 just prior to the Offering.
After dissipating substantially all of the Company's cash and making a
series of shocking negative disclosures in the first half of the year,
on July 2, 2001, the Company and its affiliates filed voluntary
petitions for bankruptcy relief. Only then did it become apparent that
the Company's entire business model and marketing strategy had been
flawed from the start.
In the bankruptcy filings, it was disclosed that contingent claims
approached almost $700 million with total debts exceeding $1 billion.
The Company's last pre-bankruptcy trade per share was for $1.82, a
decline exceeding 93% over the prior 12 months.
For more information, contact Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
NEBRASKA: State Rules Miscalculate Welfare Time Limits, Says Judge
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State officials have been starting the eligibility clock too early for
families on welfare, cutting short much-needed government assistance,
Lancaster County District Court Judge John A. Colburn wrote recently in
a ruling that could impact up to 11,000 families. The decision was
rendered in a class action filed by the Nebraska Appleseed Center for
Law in the Public Interest and applies to families who have received
Aid to Dependent Children Benefits since July 31, 1998, the Associated
Press recently reported.
"The state Health and Human Services System has exceeded its authority
and has improperly modified, altered or enlarged the provision of the
federal Welfare Reform Act," Judge Colburn wrote. The 1997 law sets a
24-month limit on benefits for families. The time limit is to start
after recipients and caseworkers sign contracts outlining steps for
recipients to take to get off welfare and become self-sufficient.
State rules add a new "wrinkle" to the 1997 law. Under Nebraska's
rules, the 24-month period begins to run either when the self-
sufficiency contract was signed or 90 days after a person applied for
benefits.
"We are pleased for the plaintiffs, all of whom are raising children,
working hard to become self-sufficient, yet need continuing help," said
Milo Mumgaard, Executive Director of the center. "The state basically
surprised them by saying one day: guess what, you've used up your
time. This was grossly unfair to these families, and, as has been
confirmed by this suit, grossly unlawful."
Defendants were the State of Nebraska, the State Department of Health
and Human Services and Ron Ross, agency Director. Agency officials
said they had not reviewed the ruling and declined to comment.
NEW YORK: Federal Court Dismisses Securities Suit V. Bank of New York
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The United States District Court for the Southern District of New York
dismissed a securities class action pending against senior officers and
directors of the Bank of New York on behalf of all depositors of
Inkombank who lost their deposits when that bank collapsed in 1998.
The complaint, as subsequently amended twice, alleges that the Company
and its senior officers knew about, and aided and abetted the looting
of Inkombank by its principals and participated in a scheme to transfer
cash improperly from Russia to various off-shore accounts and to avoid
Russian customs, currency and tax laws.
The amended complaint asserts causes of action for conversion and
aiding and abetting conversion under New York law. In addition, the
amended complaint states a claim under the Racketeer Influenced and
Corrupt Organizations Act.
US District Judge Denny Chin in Manhattan granted the Bank's request to
dismiss the suit, noting that the plaintiff shareholders didn't buy
their Bank of New York stock until July 21, 1998, after most of the
alleged wrongdoing occurred. The shareholders had claimed that the
bank's Managers committed "systematic wrongdoing" in the early and mid-
1990s when they sought to expand BONY's banking business in Russia.
The plaintiffs appealed the decision, but were thwarted by the court.
OLYMPIC FINANCIAL: Court Approves $6.125M Securities Suit Settlement
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Olympic Financial Ltd. (Formerly NYSE: OLM) gained final approval to a
$6.125 million settlement of several class actions filed against the
Company and certain of its officers and directors by stockholders who
purchased the company's common stock between July 20, 1995, and March
3, 1997. The suit claims that the defendants violated federal
securities laws by making false or misleading statements about the
company's financial condition.
To participate in the settlement, a completed proof of claim postmarked
no later than December 15, 2001, must be mailed to the Claims
Administrator's office. The parties estimate that the average per-
share recovery will be $0.06 before deductions for costs and attorneys
fees.
The Company changed its name to Arcadia Financial Ltd. (NYSE: AAC)
effective April 1997. Arcadia later merged with and became a wholly
owned subsidiary of Associates First Capital Corporation (NYSE: AFS).
OPTICAL CABLE: Bernstein Liebhard Commences Securities Suit in W.D. VA
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf all persons who acquired Optical Cable, Corporation. (NASDAQ:
OCCF) securities during the period from July 31, 2000 to October 8,
2001, inclusive. The suit is pending in the United States District
Court for the Western District of Virginia against the Company and
Robert Kopstein, President, Chief Executive Officer and controlling
shareholder.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The complaint alleges that during the class period,
defendants issued to the investing public false and misleading
information that materially misstated the Company's condition and
prospects. Moreover, the Company failed to disclose material
information necessary to make its prior statements not misleading.
The suit further alleges that defendants violated the federal
securities law by engaging in a conspiracy and/or course of conduct
pursuant to which they made a series of materially false and misleading
statements and failed to make and/or omitted necessary, required,
accurate, and material statements concerning the business and financial
operations of the Company, its common stock, and the holdings of Mr.
Kopstein, with the intent and having the effect of substantially
inflating the price of common stock.
Specifically, the defendants allegedly made numerous positive
statements as to the Company's business and financial health prior to
and during the class period, yet failed to disclose to the investing
public Mr. Kopstein used his stock as collateral for margin loans with
various brokerage accounts he maintained to speculate in technology
stocks. Given Mr. Kopstein's control of 96% of the Company's common
stock, his use of his stock as collateral created a significant risk
that large numbers of these shares could be seized and sold on the open
market by brokerage firms to cover his trading losses.
According to the complaint, Mr. Kopstein had been cautioned by at least
one brokerage firm to not speculate by borrowing money against his
stock to invest in other technology company securities. His speculation
in other technology companies securities led to the margin calls, which
then resulted in significant losses to the plaintiffs when the
brokerage firms seized Mr. Kopstein's stock and, at the same time,
dumped millions of shares into the market, resulting in the severe
depression of the Company's stock price.
For more information, contact Ms. Linda Flood, Director of Shareholder
Relations by Mail: 10 East 40th Street, New York, New York 10016 by
Phone: 800.217.1522 or 212.779.1414 by E-mail: OCCF@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com
SOUTHERN CALIFORNIA: Employees File Suit For Overdue Overtime Pay in CA
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Southern California Gas Company faces a purported class action filed by
a group of its employees claiming that the natural gas company, a
wholly owned subsidiary of Sempra Energy (NYSE:SRE), has systematically
required field crew workers to work six-day weeks, but has refused to
pay them overtime. The suit is pending in California Superior Court in
Los Angeles and seeks to represent an estimated 500 hourly workers.
According to the suit, prior to 1996 many employees who voluntarily
agreed to work on Saturdays following a full, five-day week were
allowed to take a day off in the following week. Beginning in 1996, the
Company changed the policy, making Saturday a required workday, but
refused to pay overtime compensation.
Kevin Roddy, attorney with the law firm Hagens Berman said SoCalGas
refused to pay overtime when workers clocked more than 40 hours. "Our
clients repeatedly asked the (Company) to live up to their
responsibilities and pay the required time-and-a-half, but were shut
down at every turn.The company has tried to hide behind a series of
transparent excuses, none of which stand up to the iron-clad standard
that you pay time-and-a-half for work beyond 40 hours a week." Mr.
Roddy further asserts that employees have filed formal grievances with
the Company, but have had their claims rejected.
Co-counsel Scott W. Wellman of the Laguna Hills law firm of Wellman &
Warren said that they intend to show that the practice of improperly
denying overtime is a well-orchestrated campaign to increase profits.
"We have discovered evidence that the company actually rewards managers
for keeping labor costs down.From our perspective, the company not only
knows that managers routinely increase the bottom line by denying
hourly workers fair compensation, they encourage it through these kick-
back programs," Mr. Wellman said in a joint press release.
For more information, contact Mark Firmani by Phone: 206.443.9357 or by
E-mail: mark@firmani.com
XO COMMUNICATIONS: Marc Henzel Commences Securities Suit in E.D. VA
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The Law Office of Marc S. Henzel initiated a securities class action in
the United States District Court for the Eastern District of Virginia
on behalf of purchasers of the common stock of XO Communications, Inc.
(NASDAQ: XOXO) during the period of April 4, 2001 through and including
November 29, 2001.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10-b(5) by issuing false
and misleading statements regarding the Company's financial condition
as well as its present and future business prospects.
In particular, the suit alleges that defendants misled the investing
public concerning the ability of the Company to survive until it would
be cash flow positive. Throughout the class period, defendants stated
that the Company would be able to survive at least into the middle of
2003 without the need for further financing. However, on November 29,
2001, defendants announced a transaction where the shareholders' equity
was destroyed in exchange for an investment of $800 million. Trading in
the Company's stock was quickly halted.
For more information, contact Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
XOMA LTD.: Marc Henzel Initiates Securities Suit in N.D. California
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The Law Office of Marc S. Henzel lodged a securities class action in
the United States District Court for the Northern District of
California on behalf all persons who acquired XOMA Lt. (NASDAQ: XOMA)
securities between May 24, 2001 and October 4, 2001 on behalf of all
investors who bought Company stock between May 24, 2001 and October 4,
2001, including those persons who purchased shares in or traceable to
the Company's June 26 offering of 3 million shares.
The suit says the Berkeley-based biopharmaceuticals manufacturer issued
false and misleading statements about its plans to file a Food and Drug
Administration (FDA) application for Xanelim, an experimental psoriasis
drug the Company was co-developing with Genentech Inc. For Xoma
investors, successful development of Xanelim was pivotal. In 20 years,
the company had never turned a profit or brought a drug to market.
Filing the application, known as a Biologics Licensing Application
(BLA), was an important step in gaining FDA approval for the drug. XOMA
repeatedly said it planned to file the BLA with the agency by the end
of 2001 or the first quarter of 2002.
That timetable would have put the Company and Genentech in a neck-and-
neck race with Biogen, Inc. to be the first manufacturer to market an
effective treatment for psoriasis. The winner would gain a significant
advantage in a lucrative market that is expected to reach $2 billion by
the year 2005. In fact, the Company and Genetech were nearly a year
behind Biogen. At the time the Company told investors it planned to
file its BLA by the end of 2001, it knew but failed to disclose that a
change in its manufacturing process would necessarily delay filing
until after that date.
On October 4, 2001, the Company admitted that it would not file the BLA
until the summer of 2002 at the earliest. The next day the price of
stock fell as low as $6.40 from a closing price of $9.76 per share a
day earlier.
For more information, contact Marc Henzel by Mail: 273 Montgomery Ave.,
Suite 202 Bala Cynwyd, PA 19004 by Phone: 610.660.8000 or 888.643.6735
by Fax: 610.660.8080 or by E-Mail: mhenzel182@aol.com
*********
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.
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