/raid1/www/Hosts/bankrupt/CAR_Public/020104.mbx
C L A S S A C T I O N R E P O R T E R
Friday, January 4, 2002, Vol. 4, No. 3
Headlines
CONSOLIDATED INDUSTRIES: Insurers Settle Suit Over Faulty Furnaces
CUNA MUTUAL: Court Allows Suit To Proceed, Refuses To Limit Discovery
MICROSOFT CORPORATION: Asks For Extra Time To Produce Evidence in Suit
PURDUE PHARMA: Court Refuses To Set Access Restrictions on Oxycontin
TELECOMMUNICATIONS COMPANIES: Sued For Anti-Competitive Sales Practices
Securities Fraud
ACLN LTD.: Lionel Glancy Initiates Securities Suit in S.D. New York
ACLN LTD.: Berman DeValerio Initiates Securities Suit in S.D. New York
AETNA INC.: Bernstein Liebhard Commences Securities Suit in S.D. NY
AETNA INC.: Bernard Gross Lodges Securities Suit in E.D. Pennsylvania
APW LTD.: Schiffrin Barroway Lodges Securities Suit in E.D. Wisconsin
APW LTD.: Cauley Geller Commences Securities Suit in E.D. Wisconsin
BRAUN CONSULTING: Wolf Haldenstein Commences Securities Suit in S.D. NY
CLARENT CORPORATION: Bernstein Liebhard Files Securities Suit in NY
CORRECTIONS CORPORATION: Completes Federal Securities Suit Settlement
NESCO INC.: Stull Stull Commences Securities Suit in N.D. Oklahoma
NUANCE COMMUNICATIONS: Marc Henzel Files Securities Suit In S.D. NY
PACIFIC INTERNET: Wolf Haldenstein Lodges Securities Suit In S.D. NY
PRIMUS KNOWLEDGE: Wolf Haldenstein Commences Securities Suit in S.D. NY
QUEPASA.COM: Shareholders File Suit To Block Merger With Great Western
STARMEDIA NETWORK: Finkelstein Thompson Lodges Securities Suit in NY
STARMEDIA NETWORK: Marc Henzel Initiates Securities Suit in S.D. NY
VIRATA CORPORATION: Finkelstein Thompson Files Securities Suit in NY
XPEDIOR INC.: Finkelstein Thompson Commences Securities Suit in S.D. NY
*********
CONSOLIDATED INDUSTRIES: Insurers Settle Suit Over Faulty Furnaces
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The insurers of Consolidated Industries has reached a tentative
settlement in the class action filed over the faulty furnaces,
manufactured by the Company, which were installed in about 190,000
California homes built from 1983 to 1994, but which also have shown up
in homes built as recently as 1998, The Orange County Register recently
reported.
The faulty furnaces are gas-burning horizontal units, usually mounted
in attics. They can get very hot, crack the furnace casings and let
flames escape and mix deadly carbon dioxide with the heated air being
blown through the home. The furnaces were sold under many brand names,
including Amana, Sears, Bard, Coleman, Trane and Kenmore. Some
companies have agreed to pay for replacement furnaces.
For information about the tentative settlement, contact the law firm of
Rob MacDonald and Richard G. White at 408-808-1410 or visit the firm's
Website: http://www.white-macdonald.com.
CUNA MUTUAL: Court Allows Suit To Proceed, Refuses To Limit Discovery
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An appeals court allowed the class action against CUNA Mutual Insurance
Society to proceed after it affirmed a lower court ruling denying the
Company's motion to limit discovery in the class certification stage.
The Company's group-credit disability and life insurance policyholders
brought the suit, accusing the insurance company of breach of contract
and unjust enrichment as a result of its denial of claims based on pre-
existing disabilities or normal pregnancies, on behalf of policyholders
who purchased insurance coverage from the Company through their credit
union's group policies since February 24, 1992.
The policyholders allege that CUNA rejected their claims because they
had disabilities resulting from pre-existing medical conditions or
became disabled through normal pregnancies. The policyholders maintain
that exclusions from coverage for disabilities based on these
conditions were not disclosed in the insurance applications and were
not approved by state insurance regulators, and as a result the Company
should not have denied these claims.
MICROSOFT CORPORATION: Asks For Extra Time To Produce Evidence in Suit
----------------------------------------------------------------------
Microsoft Corporation will present arguments in federal court next week
to ask for extra time to produce evidence in the antitrust class action
filed by lawyers from nine states against the software giant, according
to an Associated Press report.
The Company alleges that the penalties proposed by the states differ
significantly from the company's settlement with the Justice Department
and therefore the company needs an extra four months to sift through
millions of documents.
Lawyers for the states are expected to oppose the Company's arguments
before US District Judge Colleen Kollar-Kotelly. The states accused
the Company of delaying possible punishments that the company could
face, and believe that Judge Kollar-Kotelly should limit the scope of
penalties, an idea the judge has rejected in the past.
Judge Kollar-Kotelly set a Monday morning hearing after both sides
provided their written arguments. The current schedule calls for a
trial in March. If the judge grants Microsoft's request, that trial
would be delayed until at least late summer.
Judge Kollar-Kotelly also plans to review the Bush administration's
settlement with Microsoft in March. The nine states that did not sign
onto that settlement are Iowa, California, Connecticut, West Virginia,
Utah, Minnesota, Kansas, Florida and Massachusetts.
PURDUE PHARMA: Court Refuses To Set Access Restrictions on Oxycontin
--------------------------------------------------------------------
The US District Court for the Eastern District of Kentucky refused to
impose a variety of restrictions on access to Purdue Pharma's
Oxycontinr (oxycodone HCL controlled-release) Tablets, even by
legitimate pain patients with valid physician prescriptions in the
pending class action filed by persons who allegedly developed an
addiction for the pain relief drug.
After an evidentiary hearing, where witnesses for the plaintiffs
testified, the Court ruled in a 14-page order that the plaintiffs
lacked standing and failed to show a likelihood of irreparable harm.
The Court denied both a preliminary injunction and a temporary
restraining order.
Judge Jennifer B. Coffman said, "The plaintiffs have failed to produce
any evidence showing that the defendants' marketing, promotional, or
distribution practices have ever caused even one tablet of OxyContin to
be inappropriately prescribed or diverted."
The Company's Executive Vice President Dr. Paul Goldenheim hailed the
verdict, saying "We are extremely pleased with Judge Coffman's ruling
rejecting an attempt by plaintiffs' lawyers to hinder legitimate
patients in pain in Kentucky from receiving proper medication.
OxyContin has helped thousands of Kentuckians in pain to have a better
quality of life."
Howard R. Udell, Executive Vice President and General Counsel at Purdue
Pharma noted that this was the first test in a series of so called
class actions brought by people who claim that they have been damaged
as a result of their use or misuse of OxyContin tablets.
He said in a statement, "Purdue will challenge each of these baseless
lawsuits and we are confident that this will be the first of many
similar decisions. We believe that when judges consider the law and the
facts, as contrasted with the claims of plaintiffs' lawyers looking to
profit from these groundless lawsuits, they will conclude that the
facts just don't support the claims."
Purdue Pharma L.P., headquartered in Stamford, Conn., is a privately
held pharmaceutical company engaged in the research, development,
production, sales and marketing of both prescription and over-the-
counter medicines and hospital products.
TELECOMMUNICATIONS COMPANIES: Sued For Anti-Competitive Sales Practices
-----------------------------------------------------------------------
Two women filed an antitrust class action against major sellers of
cellular telephones and services in the United States District Court in
Manhattan, alleging the companies stifled competition and cheated
consumers through anti-competitive marketing and sales practices.
Jayme Thomas of New Jersey and Lara Goldfeder of Manhattan filed the
suit, including as defendants Verizon Wireless, AT&T Wireless Services,
Inc., Voicestream Wireless Corporation and Sprint PCS, saying these
companies controlled 100 percent of the wireless market. The companies
allegedly forced consumers to buy cell phones in a package illegally
tied to their cellular services, according to an Associated Press
report.
The suit further said that the "illegal practices" affected millions of
consumers and accused the companies of conspiring with one another by
agreeing not to compete for wireless sales to each others' wireless
service subscribers.
Scott A. Bursor, lawyer for the plaintiffs, told Associated Press,
"It's just lately gotten to the point where the industry is
sufficiently concentrated in the hands of just a few companies that
this sort of lawsuit makes sense now.These companies have so much power
over wireless networks that aggressive marketing practices such as this
go beyond what is permitted under antitrust laws."
He added that the lawsuit may break new legal ground. The lawsuit
suggested that the court help decide whether telephones and phone
services are separate products and whether the defendants have enough
economic power to restrain competition, among other questions.
Spokespersons for the companies declined to comment on the suit,
according to an Associated Press report. "I have not heard of this
yet," said Kim Thompson, a spokeswoman for Voicestream Wireless.
"We haven't seen it yet," said Ritch Blasi, a spokesman for AT&T
Wireless Services.
Securities Fraud
----------------
ACLN LTD.: Lionel Glancy Initiates Securities Suit in S.D. New York
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The Law Offices of Lionel Z. Glancy commenced a securities class action
in the United States District Court for the Southern District of New
York on behalf of a class consisting of all persons who purchased
securities of ACLN, Ltd. (NYSE: ASW) between December 27, 1998 and
December 20, 2001, inclusive.
The suit charges the Company and certain of its officers and directors
with violations of federal securities laws. Among other things,
plaintiff claims that defendants' material omissions and the
dissemination of materially false and misleading statements regarding
the Company's true financial state caused its stock price to become
artificially inflated, inflicting enormous damages on investors.
For further details, contact Lionel Z. Glancy or Michael Goldberg by
Mail: 1801 Avenue of the Stars, Suite 311, Los Angeles, California
90067 by Phone: 310-201-9150 or 888-773-9224 or by E-mail:
info@glancylaw.com
ACLN LTD.: Berman DeValerio Initiates Securities Suit in S.D. New York
----------------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt and Pucillo LLP commenced a
securities class action against ACLN Ltd. (NYSE:ASW) in the United
States District Court for the Southern District of New York on behalf
of all investors who bought the Company's stock between June 29,2000
and December 20,2001.
The suit accuses the Company, a wholesale automobile dealer and shipper
based in Belgium, of violating sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. It claims that the company, Chairman
Joseph Bisschops and two other top officers issued a series of false
and misleading statements about its business and financial results
during the class period.
Specifically, some complaint allegations concern the company's
purported ownership of a $6 million cargo ship named the Sea Atef.
Though the company said it owned the vessel, and wrote off $1.8 million
a year in connection with the asset, the complaint maintains that the
ship actually was property of the Sea Atef Shipping Co. Ltd., a company
on whose board Mr. Bisschops sits.
Other allegations focus on discrepancies in the company's filings with
the Securities and Exchange Commission and other public statements,
including:
(1) Mr. Bisschops' failure to properly report the apparent
disposition of 27% of the company's stock;
(2) Conflicting reports about the company's expenses in 2000,
including payments to a company controlled by Mr. Bisschops
for "administrative services;" and
(3) Inconsistent reports on the company's new car sales for the
first quarter of 2001.
When TheStreet.com published an investigative report on December
20,2001 detailing these discrepancies, the Company's stock plunged more
than 64%, from $26.11 to $9.40 per share. The following day, JP Morgan
downgraded the Company's shares due to lack of confidence in the
company and its management, including the company's inability to
confirm that it had $117 million in cash as it claimed. Trading of
Company stock was subsequently halted; the last shares sold before
trading was suspended were priced at $6.56.
For more information, contact Steven Morris or Michael Lange 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:
http://www.bermanesq.com.
AETNA INC.: Bernstein Liebhard Commences Securities Suit in S.D. NY
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf all persons who acquired Aetna, Inc. (NYSE: AET) securities
between December 13, 2000 to June 7, 2001 in the United States District
Court for the Southern District of New York against the Company and
officers William H. Donaldson, and John W. Rowe, M.D.
The complaint 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
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.
Specifically, throughout the class period, defendants issued multiple
press releases and other public statements that touted the Company's
management tools, systems, procedures and general management capacity
to know and hold down its costs in the highly competitive health
insurance market in which the Company was operating.
However, Defendants knew that such management systems, procedures and
controls for monitoring such costs were lacking but chose to conceal
the Company's defective systems from investors. As a result, the
price of the Company's common stock was artificially inflated
throughout the class period.
Between April 10, 2001 and May 8, 2001, the Company made a series of
disclosures that shocked investors by disclosing earnings well below
expectations due to higher-than-anticipated medical costs during the
fourth quarter of 2000 and the first quarter of 2001.
Apparently, these disappointing results were the result of
embarrassingly faulty record-keeping which caused the payment of
millions of dollars in medical claims for former clients, and the
woeful absence of even minimal management control systems that would
let management know what the Company's obligations and proper medical
costs were.
In response to this announcement, shares of the Company's stock, which
had traded as high as $43.00 per share during the class period, lost
approximately 40% of their value and closed at $25.81 on June 11, 2001.
For further details, 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: AET@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com
AETNA INC.: Bernard Gross Lodges Securities Suit in E.D. Pennsylvania
---------------------------------------------------------------------
Berndar M. Gross PC commenced a securities class action in the United
States District Court for 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. Named as
defendants in the complaint are Aetna 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 Groep
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.
In April 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 plunged 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 Susan Gross or Deborah R. Gross by Mail:
1515 Locust Street, 2nd. Floor, Philadelphia, PA 19102 by Phone: 866-
561-3600 (toll free), 800-849-3120 (toll free) or 215-561-3600 by E-
mail: susang@bernardmgross.com or debbie@bernardmgross.com or visit the
firm's Website: http://www.bernardmgross.com
APW LTD.: Schiffrin Barroway Lodges Securities Suit in E.D. Wisconsin
---------------------------------------------------------------------
Schiffrin and Barroway LLP initiated a securities class action in the
United States District Court for the Eastern District of Wisconsin on
behalf of all purchasers of the common stock of APW, Ltd. (NYSE: APW)
from September 26, 2000 through March 20, 2001, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing a series of material misrepresentations to the
market before and during the class period, thereby artificially
inflating the price of the Company's common stock.
Specifically, the complaint alleges that throughout the class period,
defendants repeatedly issued statements indicating that, among other
things, the Company was growing at a rapid pace, due, in significant
part, to strong demand for its product offerings by its customers.
The suit alleges that these statements were materially false and
misleading because, among other things, they failed to disclose or
misrepresented that:
(1) the Company was experiencing decreased demand for its
products as its primary customers were substantially
decreasing their orders;
(2) due to the declining demand, the Company's customers were
overstocked with products and, accordingly, would be
decreasing their orders in the future while they worked down
their bloated inventories; and
(3) in response to these negative factors, the Company was
attempting to slash costs and, in this regard, had started to
reduce its workforce.
On March 20, 2001, defendants finally disclosed this information and
reported that the Company's sales growth had slowed dramatically and
reported a loss of $0.15 per share, compared to analysts' expectations
of a $0.27 per share profit. Defendants also disclosed that the
Company's reduced performance, combined with other factors, caused the
it to be in breach of certain covenants in its credit agreement.
In response to this announcement, the price of the Company's common
stock dropped from $20.65 per share on March 20, 2001, to close at
$7.39 per share on March 21, 2001. Prior to this disclosure, defendant
William P. Albrecht was able to sell shares of his personally-held
stock for gross proceeds of more than $1.7 million and the Company was
able to complete its acquisition of Mayville Metal Products, which was
partially paid for using the Company's stock as currency.
For more information, 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 by E-mail:
info@sbclasslaw.com or visit the firm's Website:
http://www.sbclasslaw.com
APW LTD.: Cauley Geller Commences Securities Suit in E.D. Wisconsin
-------------------------------------------------------------------
Cauley Geller Bowman & Coates LLP initiated a securities class action
has been filed in the United States District Court for the Eastern
District of Wisconsin on behalf of purchasers of APW, Ltd. (NYSE: APW)
common stock during the period between September 26, 2000 and March 20,
2001, inclusive.
The suit charges the Company and certain of its officers and directors
with issuing a series of material misrepresentations to the market
before and during the class period, thereby artificially inflating the
price of the Company's common stock. Specifically, the complaint
alleges that throughout the class period, defendants repeatedly issued
statements indicating that, among other things, the Company was growing
at a rapid pace, due, in significant part, to strong demand for its
product offerings by its customers.
The complaint alleges that these statements were materially false and
misleading because, among other things, they failed to disclose or
misrepresented that:
(1) in fact, the Company was experiencing decreased demand for its
products as its primary customers were substantially
decreasing their orders;
(2) due to the declining demand, customers were overstocked with
the Company's products and, accordingly, would be decreasing
their orders in the future while they worked down their
bloated inventories; and
(3) in response to these negative factors, the Company was
attempting to slash costs and, in this regard, had started to
reduce its workforce.
On March 20, 2001, defendants finally disclosed this information and
reported that the Company's sales growth had slowed dramatically and
reported a loss of $0.15 per share, compared to analysts' expectations
of a $0.27 per share profit. Defendants also disclosed that the
Company's reduced performance, combined with other factors, caused it
to be in breach of certain covenants in its credit agreement.
In response to this announcement, the price of the Company's common
stock dropped from $20.65 per share on March 20, 2001, to close at
$7.39 per share on March 21, 2001. Prior to this disclosure, defendant
William P. Albrecht was able to sell shares of his personally-held
stock for gross proceeds of more than $1.7 million and the Company was
able to complete its acquisition of Mayville Metal Products, which
was partially paid for using the Company's stock as currency.
For more details, contact Jackie Addison, Sue Null or Shelly Nicholson
by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-
551-9944 by E-mail: info@classlawyer.com or visit the firm's Website:
http://www.classlawyer.com
BRAUN CONSULTING: Wolf Haldenstein Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities
class action on behalf of purchasers of the securities of Braun
Consulting, Inc. (NASDAQ:BRNC) between August 10, 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 underwriters:
(1) Credit Suisse First Boston,
(2) FleetBoston Robertson Stephens,
(3) J.P. Morgan Chase & Co.,
(4) Lehman Brothers Holdings, and
(5) Salomon Smith Barney Holdings
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 August 1999, the
Company commenced an initial public offering of 4 million of its shares
of common stock at an offering price of $7.00 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 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 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 further details, 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:
http://www.whafh.com.All e-mail correspondence should make reference
to BRAUN.
CLARENT CORPORATION: Bernstein Liebhard Files Securities Suit in NY
-------------------------------------------------------------------
Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf all persons who acquired Clarent Corporation (NASDAQ: CLRN)
securities between April 20, 2001 and August 31, 2001 in the United
States District Court for the Northern District of California against
the Company and executive officers Jerry Shaw-Yau Chang and Simon Wong
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 complaint alleges that during the class period,
defendants issued to the investing public false and misleading
financial statements 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.
In September 2001, the Company announced in a press release that it had
discovered information suggesting that its previously reported revenues
for the first and second quarters of fiscal 2001 may have been
materially overstated, and that the Company's Board of Directors was
forming a special committee to investigate a number of transactions
that placed in question its historical financial results.
The Company also stated that its first quarter 2001 revenues, as
released on April 19, 2001, and its second quarter 2001 revenues, as
released on July 19, 2001, will be reduced and the related net losses
will increase upon conclusion of the review. In addition, the Company
anticipates that its revenues for the second half of fiscal 2001 and
for fiscal 2002 will be substantially below previously anticipated
levels, and that the related losses will be significantly larger than
expected. The Company also announced that several of its officers had
been placed on administrative leave. On this news trading halted at
$5.37.
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: CLRN@bernlieb.com or
visit the firm's Website: http://www.bernlieb.com
CORRECTIONS CORPORATION: Completes Federal Securities Suit Settlement
---------------------------------------------------------------------
Corrections Corporation of America (NYSE: CXW) has completed the
settlement claims process in connection with the final settlement of
federal securities class action against the Company and certain of its
current and former directors and executive officers.
As previously disclosed by the Company, during the first quarter of
2001 the Company obtained final court approval of the settlement of a
series of consolidated federal and state class action and derivative
stockholder lawsuits. The final terms of the settlement agreements
provided for the "global" settlement of all such outstanding
stockholder litigation against the Company.
Pursuant to the terms of the settlements, the Company agreed to issue
or pay to the plaintiffs (and their respective legal counsel) in the
actions:
(1) an aggregate of approximately 4.7 million shares of the
Company's common stock (on a post-reverse stock split basis);
(2) an aggregate $29 million subordinated promissory note; and
(3) approximately $47 million in cash payable solely from the
proceeds of certain insurance policies.
The Company has previously paid approximately $17.1 million of the
insurance proceeds and issued approximately 1.6 million shares under
the terms of the settlement to plaintiffs' counsel in the federal and
state actions.
As a result of the completion of the claims process in the federal
stockholder litigation settlement, the Company has issued approximately
2.79 million shares of its common stock to the eligible claimants under
the terms of the settlement. The Company's transfer agent and
registrar, American Stock Transfer & Trust Company, has commenced the
distribution of the shares of common stock, and it is anticipated that
certificates representing the shares will be delivered to the claimants
over the course of the next several weeks.
In addition, pursuant to the terms of the settlement, the Company has
issued a $26.1 million subordinated promissory note payable to the
eligible claimants in the event the Company's common stock does not
achieve certain trading prices prior to the maturity of the note on
January 2, 2009. According to the settlement claims administrator,
Gilardi & Co. LLC, approximately $27 million in cash insurance proceeds
will also be distributed to the eligible claimants early in the first
quarter of 2002 as part of the settlement.
The promissory note issued by the Company in the federal settlement is
due January 2, 2009 and accrues interest at a rate of 8.0% per year.
Principal under the note and accrued interest may be extinguished if
the Company's common stock price meets or exceeds a "termination price"
equal to $16.30 per share for any fifteen consecutive trading days
following the date of the note's issuance and prior to the maturity
date of the note.
Additionally, to the extent the Company's common stock price does not
meet the termination price, the note will be reduced by the amount that
the shares of common stock issued to the plaintiffs appreciate in value
in excess of $4.90 per share, based on the average trading price of the
stock following the date of the note's issuance and prior to the
maturity of the note. The note to be issued in the state settlement
will also be due January 2, 2009 and accrue interest at a rate of 8.0%
per annum.
Similar to the federal settlement note, principal under the note and
accrued interest may be extinguished if the Company's common stock
price meets or exceeds the $16.30 termination price per share for any
fifteen consecutive trading days following the date of the note's
issuance and prior to its maturity. To the extent the Company's common
stock price does not meet the termination price, the note will also be
reduced by the amount that the shares of common stock issued in the
state settlement appreciate in value in excess of $4.90 per share,
based on the average trading price of the stock following the date of
the note's issuance and prior to its maturity.
Completion of the settlement claims process for the remaining state
court litigation is expected during the first or second quarter of
2002.
Upon the completion of the settlement claims process in the state
stockholder litigation, it is anticipated that the Company will issue
approximately 310,000 additional shares of common stock to the eligible
state class claimants. The Company will also issue a $2.9 million
subordinated promissory note payable to the eligible claimants similar
to the note issued in the federal settlement. Approximately $3.1
million in cash insurance proceeds will also be distributed to the
eligible state class claimants.
NESCO INC.: Stull Stull Commences Securities Suit in N.D. Oklahoma
------------------------------------------------------------------
Stull, Stull & Brody initiated a securities class action in the United
States District Court for the Northern District of Oklahoma on behalf
of all persons or entities who purchased the common stock of Nesco,
Inc. (NASDAQ:NESCQ) between April 26, 2000 and August 16, 2001,
inclusive against the Company and:
(1) Eddy L. Patterson,
(2) James Howell, and
(3) Larry Johnson
The suit 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 the Company'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 causing plaintiff and the other
members of the class to suffer damages.
For more information, 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
NUANCE COMMUNICATIONS: Marc Henzel Files Securities Suit In S.D. NY
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The Law Offices of Marc S. Henzel filed a class action lawsuit in the
United States District Court for the Southern District of New York, on
behalf of purchasers of Nuance Communications, Inc. (Nasdaq: NUAN)
securities between April 12, 2000 and December 6, 2000, inclusive.
The suit names Nuance, certain of its officers and directors, and its
underwriters as defendants.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling Nuance common stock pursuant to the April
12, 2000 IPO without disclosing to investors that some of the
underwriters in the offering, including the lead underwriters, had
solicited and received excessive and undisclosed commissions from
certain investors.
Specifically, the complaint alleges that in exchange for the excessive
commissions, defendants allocated Nuance shares to customers at the IPO
price. To receive the allocations (i.e., the ability to purchase
shares) at the IPO price, the underwriters' brokerage customers had to
agree to purchase additional shares in the aftermarket at progressively
higher prices.
The requirement that customers make additional purchases at
progressively higher prices as the price of Nuance stock rocketed
upward (a practice known on Wall Street as "laddering") was intended to
(and did) drive Nuance's share price up to artificially high levels.
This artificial price inflation enabled both the underwriters and their
customers to reap enormous profits by buying stock at the IPO price and
then selling it later for a profit at inflated aftermarket prices.
For more information, contact: The Law Offices of Marc S. Henzel by
Mail: 210 West Washington Square, Third Floor Philadelphia, PA 19106 by
Phone: 888-643-6735 or 215-625-9999 by Fax: 215-440-9475 by E-mail:
Mhenzel182@aol.com or visit the firm's Website:
http://members.aol.com/mhenzel182
PACIFIC INTERNET: Wolf Haldenstein Lodges Securities Suit In S.D. N.Y
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Wolf Haldenstein Adler Freeman and Herz LLP initiated a securities
class action lawsuit on behalf of purchasers of the securities of
Pacific Internet Limited (NASDAQ:PCNTF) between February 5, 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 underwriters:
(1) Bear Stearns Companies,
(2) CIBC World Markets,
(3) Fleetboston Robertson Stephens,
(4) J.P. Morgan Securities,
(5) Lehman Brothers and
(6) SG Cowen Securities
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 February 5, 1999, the
Company commenced an initial public offering of 3 million of its shares
of common stock at an offering price of $17.00 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 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:
http://www.whafh.com.All e-mail correspondence should make reference
to PCNTF.
PRIMUS KNOWLEDGE: 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 Primus
Knowledge Solutions, Inc. (NASDAQ: PKSI), between June 30, 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.
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 June 1999, the
Company commenced an initial public offering of 4.15 million of its
shares of common stock at an offering price of $11 per share. In
connection therewith, the Company filed a registration statement, which
incorporated a prospectus with the SEC.
The suit further alleges that the pwas 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 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 details, contact Fred Taylor Isquith, Michael Miske, Thomas
H. Burt or Gustavo Bruckner 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: http://www.whafh.com.All e-mail
correspondence should make reference to Primus Knowledge
QUEPASA.COM: Shareholders File Suit To Block Merger With Great Western
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Hispanic Web portal quepasa.com faces a securities class action filed
last December 2001 by two of its shareholders, challenging its merger
with Great Western Land and Recreation, Inc.
The suit names the Company, its officers and directors, and Great
Western as defendants and alleges various breaches of fiduciary duty.
The suit also seeks to enjoin Great Western and quepasa's former chief
executive officer, from voting any shares of quepasa common stock
acquired with the proceeds of a 500,000 secured loan made to Great
Western in connection with certain amendments to the merger agreement
and from the payment made to the former chief executive officer in
connection with the termination of his employment agreement.
The Company denied the allegations in the suit and stated its intention
to vigorously oppose the suit in a press statement.
STARMEDIA NETWORK: Finkelstein Thompson Lodges Securities Suit in NY
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Finkelstein, Thompson & Loughran initiated a securities class action on
behalf of purchasers of the securities of StarMedia Network Inc.
(Nasdaq: STRM) between April 11, 2000 and November 19, 2001, inclusive
in the United States District Court for the Southern District of New
York.
The suit 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 material misrepresentations to the
market between April 11, 2000 and November 19, 2001 concerning the
Company's financial performance. The suit alleges that the Company
reported artificially inflated financial results in press releases and
filings made with the SEC by improperly recognizing revenue in
violation of generally accepted accounting principles.
Specifically, the complaint alleges that two of the Company's primary
subsidiary, AdNet S.A. de C.V. and StarMedia Mexico , S.A. de C.V., had
engaged in improper accounting practices which had the effect of
materially overstating the Company's reported revenues and earnings by
at least $10 million.
In November 2001, as alleged in the complaint, the Company issued a
press release announcing that based on the "preliminary" results of an
internal investigation into its accounting practices, it expects to
restate its financial statements for fiscal year 2000 and the first two
quarters of 2001 and that those financial statements should not be
relied upon. The Company further reported that its Chief Financial
Officer had "resigned."
Immediately following the announcement of the restatement, the NASDAQ
Stock Market halted trading in the Company's stock, pending the receipt
of additional information from the Company. The stock last traded at
$0.38 per share, which is 98.5% less than the class period high of
$25.50, reached on April 11, 2000.
For more information, contact Andrew J. Morganti by E-mail:
ajm@ftllaw.com or visit the firm's Website: http://www.ftllaw.com
STARMEDIA NETWORK: Marc Henzel Initiates Securities Suit in S.D. NY
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The Law Office of Marc S. Henzel commenced a securities class action in
the United States District Court for the Southern District of New York
on behalf of purchasers of the securities of StarMedia Network, Inc.
(NASDAQ: STRM) between May 25, 1999 and December 6, 2000, inclusive.
The action is pending against these defendants:
(1) Goldman Sachs & Co.,
(2) BancBoston Robertson Stephens, Inc.,
(3) Salomon Smith Barney, Inc. and
(4) Morgan Stanley & Co., Incorporated.
The complaint alleges violations of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
In May 1999, the Company commenced an initial public offering of
7,000,000 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 complaint further alleges that the prospectus was materially false
and misleading because it failed to disclose, among other things, that:
(i) defendants had solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which defendants allocated to those investors material
portions of the restricted number of StarMedia shares issued
in connection with the StarMedia IPO; and
(ii) defendants had entered into agreements with customers whereby
defendants agreed to allocate StarMedia shares to those
customers in the StarMedia IPO in exchange for which the
customers agreed to purchase additional StarMedia shares in
the aftermarket at pre-determined prices.
For more information, contact Marc S. 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 by E-Mail: mhenzel182@aol.com or visit
the firm's Website: http://members.aol.com/mhenzel182
VIRATA CORPORATION: Finkelstein Thompson Files Securities Suit in NY
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Finkelstein, Thompson & Loughran commenced a securities class action in
the United States District Court for the Southern District of New York
on behalf of purchasers of the securities of Virata Corporation
(Nasdaq: VRTA) between November 16, 1999 and December 6,2000 against:
(1) Credit Suisse First Boston Corporation,
(2) Warburg Dillon Read LLC,
(3) Thomas Weisel Partners LLC,
(4) Banc of America Securities LLC,
(5) FleetBoston Robertson Stephens Inc.,
(6) Dain Rauscher Wessels,
(7) Morgan Stanley & Co. Incorporated, and
(8) US Bancorp Piper Jaffray
The suit charges defendants with violations of Sections 11 of the
Securities Act of 1933. The complaint alleges that the prospectus was
materially false and misleading because it contained material
misrepresentations and omissions about:
(i) the agreements with customers whereby defendants had solicited
and received excessive and undisclosed commissions in exchange
for an allocation of the shares issued in connection with the
initial public offering; and
(ii) defendants had entered into agreements with customers whereby
defendants would allocate shares issued in connection with the
initial public offering in exchange for which the customers
agreed to purchase additional shares in the aftermarket at
pre-determined prices.
For more information, contact Andrew J. Morganti by Phone: 866-592-1960
or 202-337-8000 by E-mail: ajm@ftllaw.com or visit the firm's Website:
http://www.ftllaw.com
XPEDIOR INC.: Finkelstein Thompson Commences Securities Suit in S.D. NY
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Finkelstein, Thompson & Loughran lodged a securities class action in
the United States District Court for the Southern District of New York
on behalf of purchasers of the securities of Xpedior, Inc., (Nasdaq:
XPDR) between November 16,1999 and December 6,2000 against:
(1) Bear, Stearns & Co., Inc.,
(2) FleetBoston Robertson Stephens Inc.,
(3) Goldman, Sachs & Co.,
(4) Merrill Lynch, Pierce, Fenner & Smith, Inc.,
(5) Morgan Stanley & Co.
The suit charges defendants with violations of Sections 11 of the
Securities Act of 1933. The complaint alleges that the prospectus was
materially false and misleading because it contained material
misrepresentations and omissions about:
(i) the agreements with customers whereby defendants had solicited
and received excessive and undisclosed commissions in exchange
for an allocation of the shares issued in connection with the
initial public offering; and
(ii) defendants had entered into agreements with customers whereby
defendants would allocate shares issued in connection with the
initial public offering in exchange for which the customers
agreed to purchase additional shares in the aftermarket at
pre-determined prices.
For more information, contact Andrew J. Morganti by E-mail:
ajm@ftllaw.com or visit the firm's Website: http://www.ftllaw.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 2002. 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
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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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