/raid1/www/Hosts/bankrupt/CAR_Public/020306.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, March 6, 2002, Vol. 4, No. 46
Headlines
ACADIAN AMBULANCE: Consumers File Suit For Overcharge on Service in LA
GEORGIA: Funeral Homes, Not Tri-State To Be Named in Desecration Suits
LEHMAN BROTHERS: Faces Suit For Violations of Antitrust Laws in S.D. NY
MAINE: Overtime Exemption Bill To Impede Truckers' Overtime Wage Suit
MARK NUTRITIONALS: Denies Allegations in Suit Over Weight Loss Product
MEDINA SUPPLY: To Give Refund & Replace Faulty Concrete In Settlement
NEW ZEALAND: Suit V. Air New Zealand Over Ansett Collapse Not Likely
QUIGLEY CORPORATION: Sued For Misleading Cold-Eeze Ads in Pennsylvania
SONY CORPORATION: Newark Residents File Suit Over Unprocessed Rebate
UNITED STATES: Asylum Seekers Commence Suit V. INS Over Green Card Law
Securities Fraud
ACTRADE FINANCIAL: Cauley Geller Lodges Securities Suit in S.D. NY
COMPUTER ASSOCIATES: Charles Piven Commences Securities Suit in E.D. NY
COMPUTER ASSOCIATES: Marc Henzel Commences Securities Suit in E.D. NY
ELAN CORPORATION: Schiffrin Barroway Expands Class Period in NY Suit
ENRON CORPORATION: Trial In Securities Suits To Commence December 2003
GLOBAL CROSSING: Berman DeValerio Commences Securities Suit in S.D. NY
GLOBIX CORPORATION: Marc Henzel Commences Securities Suit in S.D. NY
HANOVER COMPRESSOR: Rabin Peckel Commences Securities Suit in S.D. TX
HEWLETT-PACKARD COMPANY: Sued For Material Omissions Over Compaq Merger
JUNIPER NETWORKS: Glancy Binkow Commences Securities Suit in N.D. CA
LANDRY'S RESTAURANTS: Sued For Securities Act Violations in S.D. TX
LEHMAN BROTHERS: Faces 83 Suits For IPO Securities Fraud in S.D. NY
LEXMARK INTERNATIONAL: Marc S. Henzel Files Securities Fraud Suit in KY
MCLEODUSA INC.: Marc Henzel Initiates Securities Suit in N.D. Iowa
MEDI-HUT CO.: Berger Montague Initiates Securities Suit in New Jersey
MEDI-HUT CO.: Charles Piven Commences Securities Suit in New Jersey
NEWPOWER HOLDINGS: Labels NY Securities Fraud Suits "Without Merit"
NEWPOWER HOLDINGS: Marc Henzel Initiates Securities Suit in S.D. NY
NEWPOWER HOLDINGS: Abraham Paskowitz Expands Claims in Securities Suit
NEWPOWER HOLDINGS: Charles Piven Initiates Securities Suit in S.D. NY
NVIDIA CORPORATION: Marc Henzel Commences Securities Suit in N.D. CA
NVIDIA CORPORATION: Weiss Yourman Commences Securities Suit in N.D. CA
PDI INC.: Marc S. Henzel Commences Securities Fraud Suit in New Jersey
PNC FINANCIAL: Marc Henzel Lodges Securities Suit in W.D. Pennsylvania
RHYTHMS NETCONNECTIONS: Marc Henzel Commences Securities Suit in CO
SPLASH TECHNOLOGY: Faces Suit For Artificially Inflating Stock Price
SUPREMA SPECIALTIES: Berman DeValerio Commences Securities Suit in NJ
TAKE-TWO INTERACTIVE: Sued For Securities Act Violations in S.D. NY
TRAVELOCITY.COM: Shareholders File Suit Opposing Sabre Tender Offer
VAN WAGONER: Denies Allegations in Multiple Securities Suit in E.D. WI
WILLIAMS COMPANIES: Employees File Suit Over Losses In Retirement Plans
*********
ACADIAN AMBULANCE: Consumers File Suit For Overcharge on Service in LA
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Acadian Ambulance faces a class action filed by Louisiana resident
Kathy Boykin, on behalf of all the Company's customers for alleged
overcharge of service. The suit, which also names as defendant the
Company's insurance provider, American Alternative Insurance
Corporation, alleges violations of the state's Unfair Trade Practices
Act.
Plaintiff's attorney, Gary LeGros Jr., told the Daily Iberian that Ms.
Boykin was one of several clients who complained about the ambulance
company's rates. He added, "We think this is a systematic practice
being done in their service area.What brought my attention to it was I
got five bills from Acadiana Ambulance and they all had five miles. I
drove it and it was only a half mile."
Tyron Picard, attorney and Acadian Ambulance Executive Vice President,
says the suit is "frivolous" and the five-mile minimum rate is a
standard practice and helps provide other services. He told the
Iberian, "We explained our five-mile minimum rate has been part of our
published rate for the past two years.We do not charge if we do not
transport a patient, which is about 20 percent of our calls. If we
respond to a home or an accident and no one gets transported, no one
gets a bill."
No court date has been set for the suit's evidentiary hearing, Mr.
LeGros said. He added that he isn't sure when the case will go to
court, but he doubts it will be before the end of the year.
GEORGIA: Funeral Homes, Not Tri-State To Be Named in Desecration Suits
----------------------------------------------------------------------
Even as workers continue to identify bodies in Noble, Georgia, the
families of those dug from behind the Tri-State Crematory are turning
to the courts for revenge, the Atlanta Journal-Constitution reported
recently.
"Most of these clients say they want every penny those people have,
split between all the people that have been traumatized," said attorney
Robert Darroch, who has filed one of two federal lawsuits against the
Marsh family, the crematory owners and operators.
However, while relatives focus their anger on the Marsh family, owners
of Tri-State Crematory, their lawyers have deeper pockets in mind, the
funeral homes that sent the bodies to Tri-State. Simply put, funeral
homes have more insurance.
Lawyers know that the Marshes' assets are likely to be eaten up in
criminal court defending Ray Brent Marsh, the man charged with theft by
deception in the Tri-State case. That leaves the funeral homes, which
carry multimillion-dollar liability policies. "The larger the
corporation is, the larger a target they are as a defendant," Mr.
Darroch said.
Independent funeral homes typically carry liability insurance that
covers them for up to $1 million per incident, with a $2 annual cap,
said Sue Honeyman, spokeswoman for the Hartford Insurance Company. For
corporately-owned operations, however, policies can reach up to $10
million, Mr. Darroch said.
Besides the federal lawsuits filed in US District Court in Rome,
Georgia, several other lawsuits have been filed with county courts in
Georgia and Tennessee. Additional suits are expected as authorities
continue to identify bodies.
As of last Saturday, 86 of the 339 recovered bodies had been
identified. The lawsuits allege that Tri-State's owners failed to
cremate bodies as they contracted to do and, instead, discarded the
bodies in violation of law and human dignity. The funeral homes are
accused in the lawsuits of negligently failing to ensure that Tri-State
properly handled the bodies sent to them for cremation.
Most of the lawsuits, including the federal cases, seek class action,
so the lawyers can handle several families' claims in a single
courtroom before a single judge. Class actions also preserve the
claims of those who might be too shell-shocked to act now, or whose
loved ones will be too decomposed for identification. In class
actions, a few victims represent everyone who might have had a family
member recovered at the Tri-State site.
Lawyers and experts say it is possible the class actions against the
crematory, the Marshes and the funeral homes will be merged into a
single case. Settlements have the potential to reach into the tens of
millions of dollars, and have in similar cases.
For now, though, the lawyers are employing two very different
strategies as they prepare to begin the fact-finding that eventually
will shape the courtroom battle. "The funeral homes are the first line
of defense against desecration and mishandling," said attorney
Elizabeth J. Cabraser, whose San Francisco law firm filed the second of
two federal class actions now pending in Rome. The firm also has filed
a nearly identical class action in Walker County. The lawsuits name
Tri-State and its owners as well as more then 35 funeral homes.
Several funeral homes named in Ms. Cabraser's lawsuit are owned by
Texas-based Service Corporation International (SCI), the world's
largest funeral and cemetery operator. SCI already faces a lawsuit in
South Florida, where a company it owns is accused of burying people
haphazardly and discarding bones in the woods at cemeteries.
Ms. Cabraser said that bringing all the defendants together in one
place will simplify the information gathering phase of the case. Also,
the firm will argue that the funeral homes are responsible to all the
families, whether they contracted with them for a cremation or not.
Ms. Cabraser claims that any one of the funeral homes could have put an
end to the situation by checking out Tri-State.
This strategy has paid off in the past. Ms. Cabraser's law firm has
won settlements in some of the largest class actions ever filed against
the funeral home industry. In 1984, for example, residents of a county
in California investigated what they thought was smoke coming from a
hillside fire, Ms. Cabraser recalled. Instead, the residents found
giant mounds of human ashes, dumped by a pilot who was supposed to have
scattered them over the Sierra Mountains or the Pacific Ocean. High
winds had whipped the ashes into a cloud. The ensuing class action
involving the remains of over 5,000 people ended after four years with
$31 million in settlements, most of it paid by the more than 30 funeral
homes and crematories that sent the pilot the ashes.
"They had the most insurance," said Ms. Cabraser, who shared attorneys'
fees that totaled about 25 percent of the settlement. Family members
received anywhere from a few hundred dollars to several thousand,
depending upon whether they were among the named plaintiffs in the
lawsuit.
In another case which Ms. Cabraser's law firm handled, a crematory
harvested body parts for sale to medical researchers and illegally
cremated multiple bodies at the same time, returning mixed ashes to
family members. The subsequent suit, which involved about 100 funeral
homes, was settled in 1991 for more than $25 million. Some victims
received as much as $10,000.
The similarities between these cases and the Tri-State case are
striking. "Conceptually, the same legal issues and fact patterns are
involved here," Ms. Cabraser said. "The question is going to be, was
it mere negligence, or was it a problem of something worse, turning a
blind eye to something?"
Mr. Darroch took a different approach with his federal class action,
which names only Tri-State and Marsh family members. His firm intends
to file as many as a dozen lawsuits this week against individual
funeral homes. Mr. Darroch said he believes it will be difficult to
merge the funeral homes and the Marshes under one class action case,
because the arguments against them will be so different. The Marshes
and Tri-State, Mr. Darroch's lawsuit claims, refused to cremate remains
given to them. The funeral homes, on the other hand, failed to inspect
the crematories to which they sent bodies, nor did they inspect the
remains to make sure they were human.
Emory University law professor, Frank Vandall, said he doubts the court
will approve a class action that combines the funeral homes and Tri-
State, although he agrees it would be more efficient. "They just are
not related," he said of the funeral homes. "They are different
contractors. They are in different states." Professor Vandall also
said that funeral homes don't have as clear a liability in the case as
the Marshes, adding that it is up to the lawyers to show otherwise.
"The key is going to be the preciousness of a dead body," he said.
LEHMAN BROTHERS: Faces Suit For Violations of Antitrust Laws in S.D. NY
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Lehman Brothers, Inc. along with other underwriters faces a
consolidated class action, entitled In Re Initial Public Offering
Antitrust Litigation in the US District Court for the Southern District
of New Your, alleging violations of federal and state antitrust laws.
The suit alleges that the underwriter defendants conspired to require
customers who wanted IPO allocations to pay back to the underwriters a
percentage of their IPO profits in the form of commissions on unrelated
trades, to purchase other, less attractive securities and to buy shares
in the aftermarket at predetermined escalating prices.
Originally filed as twelve separate class actions in three different
courts, the consolidated antitrust action is now pending before a
single judge in the New York Federal Court. The suit is different from
the other IPO suit pending in the same court.
The Company believes it has meritorious defenses and denies liability
in the suit. It intends to defend vigorously against the suit. Based
on information currently available and established reserves, the
Company believes that the eventual outcome of the suit will not, in the
aggregate, have a material adverse effect on the consolidated financial
position of the Company but may be material to the Company's operating
results for any particular period, depending on the level of the
Company's income for such period.
MAINE: Overtime Exemption Bill To Impede Truckers' Overtime Wage Suit
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A bill proposed by the Maine's Labor Department could short-circuit
litigation in which truckers for DeCoster Egg Farms are seeking
overtime pay they say dates back to 1997. State law allegedly requires
the Company to pay the workers time-and-a-half for any hours worked
over 40 a week.
The bill, which was presented before the State's Legislature, would
exempt Maine companies that employ interstate truck drivers from the
State's overtime laws, and would seek to make the exemption retroactive
to January 1995.
The bill's supporters say trucking companies have never been required
to pay overtime to interstate drivers because they operate under
federal laws. When the State's overtime law was first enacted in 1965,
it was supposed to make truck drivers exempt, but never did so, said
Representative Charles Fisher, D-Brewer, who is cosponsoring the bill.
"This (new legislation) would put us in compliance with federal laws,"
said Mr. Fisher, House Chairman of the Transportation Committee.
Donald Fontaine, a Portland attorney who is representing the egg-
delivery drivers and several others who have filed similar suits, said
passage of the bill would leave the truckers without a case. "I don't
think it is right. I don't think anybody should be exempt," said
Gontran Jean of Auburn, a trucker who has joined the class action. "We
are required to work Saturdays, Sundays, holidays. Making these
companies pay overtime would stop them from using us as much," he
added.
Mr. Jean said he makes about $120 for delivering a truckload of eggs
from Maine to New Jersey, which takes about 24 hours, but on trips
delayed by bad weather or heavy traffic, his pay for the same trip can
boil down to less than minimum wage, he said.
The Maine Motor Transport Association, which represents dozens of
trucking companies, said defeat of the overtime exemption bill would
deal a significant blow to the trucking industry. "It would put Maine-
based companies out of business," warned the Association's Dale
Hanigton.
MARK NUTRITIONALS: Denies Allegations in Suit Over Weight Loss Product
----------------------------------------------------------------------
Mark Nutritionals, Inc., manufacturer of weight loss product Body
Solutions, vehemently denied a Dade City woman's claim that she was
misled by the Company, the St. Petersburg Times reported recently.
Janet Makinen filed the suit, which she hopes to expand to class action
status, representing many consumers, claiming that she bought the Body
Solutions product after hearing a radio advertisement and was
disappointed when she actually gained weight instead of losing weight.
In its response to Ms. Makinen's lawsuit, filed in January of this
year, Company attorneys states that the Company is not at fault.
Furthermore, the attorneys argue the suit is procedurally flawed
and should not go forward. The response, signed by Tampa attorney
Robert L. Ciotti, also says state law bars against punitive damages for
allegations of false advertising.
In addition, Mr. Ciotti's response says, the case fails to clearly
state a reason for the suit, and consumers take on some risk and
obligation in buying the product. "Any injuries are due to outside
factors," Mr. Ciotti argued.
Ms. Makinen's attorney, Christa Collins, was not available for comment,
but she earlier said that the lawsuit was just the first step in a long
process. After a response is filed, Ms. Collins said she would need to
convince a judge that the case should be opened to include any consumer
who feels the same way as Ms. Makinen.
MEDINA SUPPLY: To Give Refund & Replace Faulty Concrete In Settlement
---------------------------------------------------------------------
Ohio-based concrete supplier, Medina Supply Company, has agreed to give
refunds to homeowners who used its concrete for driveways over a 16-
month period ending in 1994, The Plain Dealer (Cleveland, Ohio),
recently reported, to settle an eight year old class action charging
the Company with supplying watered-down concrete that did not hold up.
The Company offered to give a mix of money and new concrete to those
customers, under the settlement. Plaintiffs who have not already
replaced their driveways will get $500 and a voucher for up to eight
cubic yards of concrete. Those who have replaced their driveways will
get $1000. The settlement includes $355,000 in attorneys' fees and
$70,000 in expenses. Affected homeowners have until May 21 to apply to
participate in the settlement.
Medina Supply Co. has not admitted liability, but decided to compromise
rather than continue racking up legal bills, said David Kutik, the
Company's lawyer. Mr. Kutik estimates that a couple of hundred people
will respond to the settlement, although the class action, Howard Rabb,
thinks at least twice that many qualify. To participate in the
settlement, approved by Cuyahoga Common Pleas Judge Kathleen Sutula,
homeowners must prove that their concrete came from the Company between
January 1, 1993, and May 24, 1994, and that it had scaling problems.
The main problem was with "scaling," when the top layer of concrete
flakes off, Mr. Rabb said. He blamed too much water in the concrete, a
problem he attributed to cost-cutting by the Company. Mr. Kutik, on
the other hand, said that contractors, not Medina Supply Co. determined
the ratio of ingredients in the concrete. Harsh winter weather and
improper paving techniques by contractors also contributed to the
problems, he said.
NEW ZEALAND: Suit V. Air New Zealand Over Ansett Collapse Not Likely
--------------------------------------------------------------------
The Australian Securities and Investment Commission (ASIC) might not
proceed with a class action against Air New Zealand for its role in the
collapse of Ansett Airlines, due to budget constraints.
It has been a financially difficult year for the securities watchdog,
ABC News Online reports. Its budget may be at its limits, and there
might not be enough money to sustain a class action. A taskforce set
up to investigate the demise of Ansett will add further costs. ASIC's
budget last year was around $140 million, $60 million of which was set
aside for enforcement.
Professor of Corporate Law at Sydney's University of Technology Michael
Adams told ABC that the introduction of new legislation in March to
give Ansett workers the right to pursue Air New Zealand for their
outstanding entitlements will be another financial burden. He said
"Sixty million dollars sounds like a lot of money but when you divide
it up over these sort of matters it is actually very, very expensive,
indeed you can only handle a few matters at any one time."
Meanwhile, the Australian Council of Trade Unions (ACTU) is also
considering a class action against the Fox-Lew Tesna consortium that
participated in the failed bid to save Ansett, on behalf of former
Ansett workers. As workers handed in their identification badges and
uniforms, the ACTU revealed it may launch a class action against the
Tesna consortium for the losses staff incurred over the past few
months.
QUIGLEY CORPORATION: Sued For Misleading Cold-Eeze Ads in Pennsylvania
----------------------------------------------------------------------
Quigley Corporation faces a class action filed by Georgia residents
Jason Tesauro and Elizabeth Eley in the Court of Common Pleas of
Philadelphia County, Pennsylvania, over their advertisements for
certain Cold-Eezer products between August 1996 and November 1999.
The plaintiffs claimed that they purchased certain Cold-Eeze products
during the stated period, based upon cable television, radio and
Internet advertisements which allegedly misrepresented the qualities
and benefits of the Company's products. The suit alleges
Pennsylvania's consumer protection law violations, breach of warranty
and unjust enrichment.
In October 2000, the Company filed preliminary objections to the suit,
seeking dismissal of the action. The Court sustained certain
objections, thereby narrowing the suit. In May 2001, the plaintiffs
filed a motion for class certification, which the Company opposed.
In January 2002, the Court denied in part and granted in part the
motion for class certification. The court denied the class based on
the claim under the Pennsylvania Consumer Protection Law. However, the
Court certified the class based on claims of breach of warranty and
unjust enrichment. Quigley plans to file a motion for
clarification/reconsideration of the ruling.
The Company believes the suit lacks merit and vows to vigorously defend
against it. The case is at a stage where no discovery has been taken
and no prediction can be made as to its outcome.
SONY CORPORATION: Newark Residents File Suit Over Unprocessed Rebate
--------------------------------------------------------------------
Sony Corporation of America faces a class action in Wayne County
Supreme Court filed by a Newark resident, after he allegedly failed to
received a promised $100 rebate for a computer he purchased for his
son, the Finger Lakes Times reports. The suit, which also names
subsidiary Sony Electronics as defendants, purports to be filed on
behalf of other customers who failed to receive their rebates.
Mr. Reid reportedly bought a Sony computer on September 4, 2000. The
Company promoted a $100 rebate for that computer model, if purchased
between June 1 and November 30 that year. Mr. Reid said he mailed the
rebate form on December 31, 2000, and never received a reply, despite
repeated inquiries to Sony by mail, phone and fax. He added that a web
site run by the Company for rebate inquiries was defunct.
Plaintiff's attorney James Snyder wrote, "In numerous instances,
eligible purchasers of Sony VAIO Notebook and/or laptop computers did
not receive a cash rebate for purchases made in the time stated.Cash
rebates were not reasonably obtainable as defendants, if not among
other things, did not adequately staff, supply, maintain, operate, or
otherwise equip the departments responsible for processing said
rebates." Mr. Snyder said the rebate request forms were apparently
"misplaced, wrongfully rejected, processed incorrectly or simply
ignored and not paid" by Sony.
George Lowe, a Syracuse lawyer representing the Company, told the
Finger Lake Times that he will move to dismiss the case. "We've
reviewed the case and we feel it is without merit," said Lowe, who
would not comment further.
UNITED STATES: Asylum Seekers Commence Suit V. INS Over Green Card Law
----------------------------------------------------------------------
The US Immigration and Naturalization Services (INS) faces a national
class action filed on behalf of thousands of persons who sought asylum
in the United States, challenging the INS' misadministration of a law
that qualifies persons granted asylum the right to live and work in the
United State permanently. The 50 named plaintiffs in the suit all are
refugees who fled persecution in their home countries and were granted
asylum in the United States.
Under US law, persons granted asylum may apply to become permanent
residents of the United States, that is, have so-called "green cards",
after one year. Congress has imposed a cap of 10,000 on the number of
asylees who can be granted permanent resident status each year. There
is a backlog of at least 60,000 asylees seeking permanent status. The
suit alleges that the government:
(1) failed to distribute more than 18,000 "green cards" in the
last eight years while more than 60,000 asylees wait in legal
limbo;
(2) failed to process applications in the required first-in,
first-out order; and
(3) kept thousands of asylees in the wait list who are exempt from
the cap.
Further, the suit challenges the government's practice of requiring the
asylum seekers to obtain a new employment authorization card (EAD) each
year while they wait for their permanent status. Under the law, they
have the right to work and should not be required to shoulder the $120
annual fee the INS charges for renewal of their employment
authorization.
"This is not a case of benign neglect," stated Richard Rulon, Chairman
of the Board of Trustees of the American Immigration Law Foundation.
"These individuals are suffering. They are forced, unnecessarily, to
wait for years to obtain the permanent status that is provided under
our laws. The delay prevents them from becoming full, participating
members of our society. The financial burden imposed by the required
EAD renewals can amount to thousands of dollars for a single family."
"There is no reason to delay adjustment of status for people who have
fled persecution abroad and have already been granted asylum. They have
satisfied all security checks and are now living and working here
lawfully. Congress directed that these people have lawful permanent
resident status and the INS' mismanagement is thwarting Congressional
intent. We should grant these people permanent resident status and
allow them to fully rebuild their shattered lives," stated Nadine
Wettstein, an attorney at the American Immigration Law Foundation.
For more information Supriya Satpathy or Nadin Wettstein by Phone:
202-742-5608 or 202-742-5611.
Securities Fraud
ACTRADE FINANCIAL: Cauley Geller Lodges Securities Suit in S.D. NY
------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the US District Court for the Southern District of New York on
behalf of purchasers of Actrade Financial Technologies, Ltd. (Nasdaq:
ACRT) publicly traded securities between March 11, 1999 and February
11, 2002, inclusive. The suit names as defendants the Company and:
(1) Amos Aharoni, President, CEO and Chairman until January 3,
2001, thereafter Chairman,
(2) Alexander Stonkus, President, CEO and Director since January
3, 2001,
(3) Joseph P. D'Alessandris, CFO and
(4) David J. Askin, President of External Affairs since January 3,
2001
The defendants allegedly violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of materially false and misleading statements to
the market during the class period. Throughout the class period, the
Company issued press releases announcing record quarterly results and
describing its business as providing trade financing and business-to-
business financing solutions.
In addition, Actrade, in its fiscal year 2000 and 2001 Annual Reports
filed with the SEC on Form 10-K405, represented that its loans were
covered by insurance and surety bonds, which minimized its risk on the
loans. The representations in the press releases and annual reports
were, according to the allegations of the complaint, materially false
and misleading because the Company had loaned over $10 million to
individuals, not businesses, who used the proceeds personally.
In addition, according to the complaint, defendants are alleged to have
failed to disclose to their insurers and sureties the nature of the
personal loans and, as a result, the Company was jeopardizing its
ability to collect under the policies and surety bonds in the case of
default.
On February 11, 2002, Barron's published an article detailing the
Company's questionable lending practices and its alleged
misrepresentations and omissions to insurers and sureties. For example,
the article recounts a $6.3 million loan-default by an individual that
the Company was attempting to recruit as a broker, and which an insurer
and surety refused to cover on his default because they allegedly were
led to believe by the Company that the loan was for a business purpose
when in fact the individual pocketed the funds.
In reaction to the Barron's article, the Company's stock price
plummeted by 45%, falling to $13.75 per share on February 11, 2002,
from a $24.89 per share close on February 8, 2002.
For more information, contact Jackie Addison, Sue Null or Shelly
Nicholson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
888-551-9944 by E-mail: info@classlawyer.com or visit the firm's Web
site: http://www.classlawyer.com
COMPUTER ASSOCIATES: Charles Piven Commences Securities Suit in E.D. NY
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The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Computer Associates
International, Inc. (NYSE:CA) securities between May 28, 1999 and
February 25, 2002, inclusive, in the US District Court for the Eastern
District of New York against the Company and:
(1) Charles B. Wang,
(2) Sanjay Kumar and
(3) Ira H. Zar
The suit charges that defendants violated the federal securities laws
by issuing a series of materially false and misleading statements to
the market throughout the class period which statements had the effect
of artificially inflating the market price of CAI's securities.
For more information, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-332-0030 by E-mail: hoffman@pivenlaw.com
or visit the firm's Web site: http://www.pivenlaw.com
COMPUTER ASSOCIATES: Marc Henzel Commences Securities Suit in E.D. NY
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of New
York on behalf of purchasers of Computer Associates, Inc. (NYSE: CA)
securities between May 28, 1999, and February 25, 2002.
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, beginning prior to May 1999, the Company falsely
indicated that it had penetrated the distributed systems market when,
in fact, it was giving away its distributed system software free, or at
nominal additional cost, to customers who were also extending mainframe
software licenses, and attributed large portions of the resulting
revenue to the non-mainframe products.
Also, beginning prior to May 1999, and ending in October 2000, when the
Company extended a license during its term, it recognized revenue for
the entire new license. Until June 2000, when CAI began using new
auditors, it did not "back out" the revenue from the unexpired portion
of the old license, double-counting this revenue.
After June 2000, the Company began backing out this figure in an
obscure line item, but never disclosed that this caused revenue to be
overstated by more than one hundred million dollars each quarter prior
June 2000.
Defendants in order to hide a severe drop in revenue as measured by
generally accepted accounting principles (GAAP), announced a "new
business model," which they represented involved offering more flexible
licensing terms to customers.
In fact, the "new business model" was a cover to institute new, non-
GAAP compliant accounting (which the Company called "pro forma, pro
rata"), and to obscure the fact that the switch from long-term licenses
to flexible subscriptions was not a pro-active move, but a symptom of
the obsolescence of the Company's main product line. While the stated
goal of the "new business model" was to provide customers more flexible
terms, the real purpose was to cover up the fact that the Company could
no longer get many of their mainframe customers to purchase the long-
term licenses of mainframe software which have been its mainstay.
After the announcement of the "new business model" in October 2000, the
Company issued press releases heralding moderate growth, though the
GAAP figures showed a revenue decrease of nearly 60 percent.
The "pro forma, pro rata" method counted revenue from old license sales
in current and future periods, using old revenues to buttress the
current, deteriorating sales. Defendants have attempted to have their
cake and eat it, too. In a strong economy, the Company recognized all
the revenue from its sales immediately, even double-counting some
revenue, showing impressive numbers. Now, in a sagging economy, they
have obscured the real loss of sales by changing to a method of
accounting so back-loaded that it does not conform to GAAP. The "pro
forma, pro rata" method also did not make the distinctions between
product and service revenue required by GAAP, obscuring the distinction
and further hiding the deterioration in sales.
CAI has continued to report its GAAP figures, as it is required by the
Securities and Exchange Commission (SEC) to do. Incredibly, defendants
have falsely stated that the GAAP figures are not reflective of the
Company's financial position, and that the "pro forma, pro rata"
figures do accurately reflect the Company's financial position.
The Company's true condition, however, is shown by the conduct of
defendants during the class period. After announcing the "new business
model" but before reporting under it for the first time, and contrary
to the Company's representations that the rosy picture created by the
"pro forma, pro rata" figures was an accurate portrayal of the
Company's position, the defendants engineered a clandestine, firm-wide
layoff, hiding the terminations as individual performance-based
firings. They fired possibly as many as a thousand employees with no
severance package, and continue to deny that the firings were a layoff,
even though executives involved in the layoff have confirmed it to the
New York Times (as reported on March 20, 2001).
More recently, CAI was forced to withdraw a planned debt offering after
Moody's questioned the quality of the Company's credit. As a result,
the Company admits, it was forced to draw down $600 million on one
credit line to pay another.
The desperate cost-cutting by secret layoff, use of its new
unrecognized accounting just when its revenue has dropped sharply, and
the use of credit lines to service existing debt, demonstrate that
defendants are keenly aware of the precarious financial condition of
the Company, and have deliberately mislead the investing public.
The misleading picture the Company has presented has not gone
unquestioned. On February 22, 2002, the Company confirmed that it was
aware that both the Securities Exchange Commission and the Federal
Bureau of Investigation were investigating its accounting for civil,
and in the case of the FBI, criminal violations.
News of the criminal and civil probes, which began to surface on
February 20, caused investors to flee the stock, which fell from a
February 19 closing price of $25.31 to a February 22 close of $15.99, a
drop of 36.8%.
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 Web site: http://members.aol.com/mhenzel182
ELAN CORPORATION: Schiffrin Barroway Expands Class Period in NY Suit
--------------------------------------------------------------------
Schiffrin & Barroway, LLP expanded the class period in the securities
class action pending in the United States District Court for the
Southern District of New York on behalf of all purchasers of the common
stock of Elan Corporation, PLC (NYSE: ELN) to include purchasers of the
Company's stock from April 30, 1999 through February 4, 2002,
inclusive.
The suit charges the Company and certain of its officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing a series
of materially false and misleading statements regarding the Company's
financial condition.
The suit alleges that as part of their effort to boost the price of
Company securities, defendants materially overstated the Company's
revenues by creating entities that were essentially controlled by it
for research and development. Elan immediately took back its
investment in the form of a license fee, which it recorded as revenue.
In some instances the joint ventures had no money left for the
development of drugs and the Company ended up lending money to the
entity.
After the market closed on January 29, 2002, The Wall Street Journal
described the Company's accounting as a "charade" and quoted a former
SEC accountant as stating that it is like "taking money out of one
pocket and putting it in another."
On February 4, 2002, the Company announced that earnings for the fourth
quarter 2001 would drop 84% and that its profits for fiscal year 2001
would fall well short of estimates. On this news, its ADRs fell $15.10
per share from $29.95 per share to $14.85 per share, a loss of more
than 50% of their value in a single day.
For further details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
ENRON CORPORATION: Trial In Securities Suits To Commence December 2003
----------------------------------------------------------------------
A Texas federal court has set for December 2003 the trial in the
multibillion-dollar lawsuits against fallen energy giant Enron
Corporation, and its former auditor, Arthur Andersen LLC, Associated
Press reports.
Enron faced numerous class actions when the Company's stock started
plummeting late last year. The Company later filed for bankruptcy, in
what is regarded as the biggest bankruptcy in the nation's history.
Shareholders lost millions due to their investments in the Company's
stock, while several state pension plans and other organizations lost
millions because of the part of their portfolios invested in Enron.
Company employees also commenced 401(k) suits, after they lost most of
their retirement and pension savings. The Company allegedly locked
their investments in Enron stock, while its executives were busy
disposing of their own personal stocks.
Federal Judge Melinda Harmon told lawyers that she expects the cases to
be settled, and that the trial date gives them 18 months to prepare
documents and their arguments in case of a trial. She said she hoped
an efficient resolution of the cases would change "the nation's
impression that the justice system grinds slowly in a Dickensian
fashion." She also ordered Enron to provide plaintiffs with all
documents the Company has given Congress and the Labor Department, both
of which are investigating the Company's collapse, according to AP.
Rod Jordan, member of the Severed Enron Employees Coalition, told AP,
"It's something real now. Without a date, it was something that maybe
would go to trial someday, maybe it won't." Mr. Jordan was among 4,500
workers abruptly laid off in December after Enron filed for bankruptcy.
Trey Davis, spokesman for the University of California, whose pension
plan also lost millions due to the collapse, said "The order sends a
strong message that the judge wants to move quickly."
Auditing firm Arthur Andersen, LLP reportedly tried to negotiate a $750
million settlement, with the various groups in the suit, saying that
more than that amount would put it out of business. The Company
reportedly wants to leave the Enron debacle behind, and proceed with
its other concerns. According to Associated Press, Andersen spokesman
Patrick Dorton declined comment Friday beyond an earlier statement that
"we think it is in the best interests of all parties to deal
expeditiously and responsibly with what has occurred."
Enron spokeswoman Karen Denne said, "We'll continue to cooperate with
all investigations and inquiries."
GLOBAL CROSSING: Berman DeValerio Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt and Pucillo initiated a securities
class action against several top officers of Global Crossing Ltd.
(NYSE: GX) (OTC Bulletin Board: GBLXQ) who allegedly released false and
misleading financial statements to investors, in the US District Court
for the Southern District of New York.
The suit, filed on behalf of all investors who bought Company stock
from January 2, 2001 through October 4, 2001, charges five top Company
managers with artificially inflating earnings by improperly recording
and reporting cash and revenue from certain long-term lease contracts
for the rights to use the company's fiber optic cable network.
Simultaneously, the complaint says, the Company entered into
substantially similar agreements with the same companies to purchase
bandwidth capacity from them in a different area. In essence, the
complaint alleges that these swap transactions were improperly recorded
to artificially inflate the Company's financial results.
At the same time, Global Crossing was carrying an increasingly heavy
debt burden that was exacerbated by an ever-shrinking market for
bandwidth. This forced the company to drastically lower its prices. The
Company was unable to offset the declining demand for bandwidth
capacity with the sale of customized provider services because, unknown
to investors, the defendants had no viable plan for establishing the
Company as a provider of these services, the complaint says. Also
during the class period, the complaint says, the individual defendants
and other Company insiders generated more that $149 million from
insider stock sales.
The full extent of the Company's financial crisis began to emerge on
October 4, 2001 when the company announced that its third quarter 2001
cash revenues were $400 million below expectations and that it was
selling off its desktop trading systems division. The suit alleges that
investors were also stunned by the announcement that Global Crossings'
expected recurring adjusted EBITDA would fall almost $300 million less
than analyst expectation.
In reaction to these statements, Company stock plunged 49% to $1.07 per
share.
For more information, contact Jeffrey C. Block or Patrick T. Egan by
Mail: One Liberty Square, Boston, MA 02109 by Phone: 800-516-9926 by E-
mail: law@bermanesq.com or visit the firm's Web site:
http://www.bermanesq.com.
GLOBIX CORPORATION: Marc Henzel Commences Securities Suit in S.D. NY
--------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Southern District of New
York, on behalf of those persons who purchased or otherwise acquired
the common stock of Globix Corporation (Nasdaq: GBIX) during the period
of November 16, 2000 through and including December 27, 2001.
The complaint charges that the Company and officers Marc Bell, Peter
Herzig and Brian Reach, violated federal and state securities laws by,
among other things, issuing false misleading statements regarding the
Company's financial condition as well as its present and future
business prospects.
As alleged in the complaint, on November 16, 2000, in an effort to
stabilize the price of Globix stock and to assuage investor concerns
over the Company continuing as going concern, defendants set forth the
Company's business plan which stated that it would be fully funded to
fiscal 2003 and thereafter cash flow positive. This sentiment was
repeated in the Company's annual report filed on Form 10-K with the
Securities Exchange Commission and numerous times thereafter in Company
press releases and conference calls.
Despite such assurances, on December 27, 2001, defendants shocked the
investing community by announcing that management had been secretly
negotiating with its bond holders and preferred stock holders to
effectuate a pre-packaged bankruptcy that would result in a near total
dilution of the existing common stockholders' interest in the Company.
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 Web site: http://members.aol.com/mhenzel182
HANOVER COMPRESSOR: Rabin Peckel Commences Securities Suit in S.D. TX
---------------------------------------------------------------------
Rabin and Peckel LLP initiated a securities class action in the United
States District Court for the Southern District of Texas, on behalf of
all persons or entities who purchased Hanover Compressor Company.
common stock (NYSE:HC) between November 8, 2000 through January 28,
2002, both dates inclusive, against the Company and:
(1) Michael J. McGhan,
(2) William S. Goldberg and
(3) Michael A. O'Connor
The suit alleges that defendants violated Section 10(b) of the
Securities and Exchange Act of 1934 by issuing a series of materially
false and misleading statements about the Company's financial results
announced during the class period.
Hanover, which performs natural gas compression services for oil and
gas companies, and three of its top executives misled the investing
public during the class period concerning the Company's investment in a
joint venture to build and operate a natural gas processing plant in
Nigeria.
Specifically, it is alleged that the Company improperly recognized
revenue associated with the joint venture when the project was years
from completion. In addition to such violations of generally accepted
accounting principles, the Company is alleged to have issued shares in
a secondary offering at grossly inflated prices.
On January 28, 2002, the Company reported that it had booked millions
in revenue and earnings in connection with the Nigerian project and
that its Board of Directors had begun a review of "the transactions of
this joint venture and the related accounting." By that date, the
Company's shares had fallen below $15.00 per share.
For further details, contact Eric 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
HEWLETT-PACKARD COMPANY: Sued For Material Omissions Over Compaq Merger
-----------------------------------------------------------------------
Shareholders recently filed a class action against computer firm
Hewlett-Packard Company, in the US District Court for the Northern
District of California, alleging the Company and certain officers and
directors omitted "material information" in proxy materials for the
planned acquisition of Compaq Computer Corporation, Dow Jones Business
News recently reported.
In a prepared statement, plaintiffs' law firm Weiss & Yourman said the
complaint alleges the defendants violated their fiduciary duties. The
law firm said the complaint seeks to block the merger from closing and
also aims to prevent a shareholder vote on the deal as well as the
solicitation of votes, "until a corrective proxy statement has been
issued" and until the defendants re-evaluate "Compaq's worth as a
merger-acquisition candidate."
Board member Walter Hewlett, the son of a Company co-founder, is trying
to stop the $21.9 billion deal. The transaction needs to be approved
by shareholders at a March 19 meeting.
Last week, Mr. Hewlett, through filings with the Securities and
Exchange Commission, tried to back up his claims that the Company chief
executives of Hewlett-Packard and Compaq (CPQ) are slated to receive
rich employment contracts after closing the deal. Both the Company and
Compaq rebutted the charge, saying that Mr. Hewlett knows the pay
packages ultimately had been rejected.
Mr. Hewlett has asked former chief executive, Lew Platt, to consider
returning to that post, the Financial Times reported on its Web site.
JUNIPER NETWORKS: Glancy Binkow Commences Securities Suit in N.D. CA
--------------------------------------------------------------------
Glancy & Binkow LLP initiated a securities class action in the United
States District Court for the Northern District of California on behalf
of all persons who purchased securities of Juniper Networks, Inc.
(NASDAQ:JNPR) between April 12, 2001, and June 7, 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 Juniper's material omissions and the
dissemination of materially false and misleading statements regarding
the nature of the Company's business prospects caused its stock price
to become artificially inflated, inflicting enormous damages on
investors.
For more information, contact Michael Goldberg or Lionel Z. Glancy by
Mail: 1801 Avenue of the Stars, Suite 311, Los Angeles, California
90067 by Phone: 310-201-9150 or 888-773-9224 by E-mail:
info@glancylaw.com or visit the firm's Web site:
http://www.glancylaw.com
LANDRY'S RESTAURANTS: Sued For Securities Act Violations in S.D. TX
-------------------------------------------------------------------
Landry's Restaurants, Inc. faces several securities class actions
pending since June 1999 in the United States District Court for the
Southern District of Texas, Houston Division, alleging violations of
federal securities laws in the Company's initial public offering last
March 1998.
The suits, which also names as defendants, all of the Company's current
Executive Officers, directors and underwriters, allege that the
defendants violated federal securities laws during certain periods
while individually selling the Company's common stock.
Although the ultimate outcome of this matter cannot be determined at
this time, Landry's believes these claims are without merit and intends
to defend these claims vigorously.
LEHMAN BROTHERS: Faces 83 Suits For IPO Securities Fraud in S.D. NY
-------------------------------------------------------------------
Lehman Brothers, Inc. has been named as a defendant in approximately
192 purported securities class actions that were filed between March
and December 2001 in the United States District Court for the Southern
District of New York.
The actions, which allege improper initial public offering (IPO)
allocation practices, have been brought by persons who, either directly
or in the aftermarket, purchased IPO securities during the period
between March 1997 and December 2000. The plaintiffs allege that the
Company and other IPO underwriters required persons receiving
allocations of IPO shares to pay excessive commissions on unrelated
trades and to purchase shares in the aftermarket at specified
escalating prices.
The suits further claim that these alleged practices violated various
provisions of the federal securities laws, specifically, sections 11,
12(a)(2) and 15 of the Securities Act of 1933, section 10(b) of
the Exchange Act, Rule 10b-5 promulgated thereunder, and section 20(a)
of the Exchange Act.
The 192 actions in which the Company was named a defendant have been
consolidated into 83 cases, each involving a distinct offering. Those
83 consolidated cases, and approximately 240 others in which the
Company is not named as a defendant, have been coordinated for pretrial
purposes before a single judge.
LEXMARK INTERNATIONAL: Marc S. Henzel Files Securities Fraud Suit in KY
-----------------------------------------------------------------------
The Law Offices 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, Lexmark 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 failed to properly account for in the
Company's publicly reported financial results, causing its 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 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 Web site: http://members.aol.com/mhenzel182
MCLEODUSA INC.: Marc Henzel Initiates Securities Suit in N.D. Iowa
------------------------------------------------------------------
The Law Offices of Marc S. Henzel commenced a securities class action
in the United States District Court for the Northern District of Iowa
on behalf of purchasers of the securities of McLeodUSA Inc. (NASDAQ:
MCLD) between January 30, 2001 and December 3, 2001 inclusive, against
the Company and:
(1) Clark McLeod, Chairman and Co-CEO,
(2) Steve Gray. President and Co-CEO and
(3) Chris Davis, Chief Operating and Financial Officer since
August 1, 2001
The suit charges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of materially false and misleading statements to
the market between January 30, 2001 and December 3, 2001.
The complaint alleges that the Company issued a series of materially
false and misleading statements regarding its business, operations and
financial statements that failed to disclose:
(i) that the Company was failing to timely and properly recognize
hundreds of millions of dollars in impairment losses in
connection with certain acquisitions, such as Splitrock
Services, Inc. and Caprock Communications Corp.;
(ii) that the Company did not have the funds necessary to complete
its National network and that it would soon have to abandon
its plans to finish the network; and
(iii) that the Company was unable to service its substantial debt
and lacked the financial flexibility necessary to avoid a
restructuring.
During the class period, prior to the disclosure of the true facts
about the Company, the Company purchased Intelispan for $40 million in
McLeodUSA stock
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 Web site: http://members.aol.com/mhenzel182
MEDI-HUT CO.: Berger Montague Initiates Securities Suit in New Jersey
---------------------------------------------------------------------
Berger & Montague, PC commenced a securities class action against Medi-
Hut Co. (Nasdaq: MHUT) and certain of its officers and directors in the
United States District Court for the District of New Jersey, on behalf
of all persons or entities who purchased the Company's common stock
during the period from April 4, 2000 through February 4, 2002.
The complaint seeks damages for violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, against the Company and:
(1) Joseph A. Sanpietro, President and Chief Executive Officer,
(2) Laurence M. Simon, Chief Financial Officer,
(3) Robert Russo, Treasurer,
(4) Vincent Sanpietro, Secretary,
(5) James G. Aaron, director, and
(6) James S. Vacarro, director
The suit alleges that defendants knowingly and recklessly disseminated
materially false and misleading statements and omissions that
misrepresented Medi-Hut's business, operations and financial
performance. As stated in the suit, the Company misled the investing
public by failing to disclose that a Company vice president, Lawrence
Marasco had a controlling interest in Larval Corporation, the Company's
largest customer.
Specifically, the Company failed to disclose that Mr. Marasco, the
Company's Vice President for Sales and Marketing, had a controlling
interest in Larval. During fiscal year 2001, sales to Larval accounted
for 62% of the Company's revenues.
Because Mr. Marasco had a controlling interest in one of the Company's
customers, generally accepted accounting principles (GAAP) dictated
that the Company identify sales to that customer as related party
transactions. The Company, however, failed to disclose the true nature
of its sales to Larval. Indeed, each report the Company filed with the
Securities and Exchange Commission during the class period, including
quarterly and annual reports, was devoid of any reference to the fact
that a Company employee controlled one of its largest customers.
These reports were disseminated to shareholders and/or were publicly
available to potential investors.
The suit alleges that the misrepresentations and omissions by
defendants influenced the views of stock market analysts and the
investing public and brought about an unrealistic assessment of the
Company's performance and prospects. As a result, the Company's stock
traded at artificially inflated prices throughout the class period.
On February 4, 2002, the nature of the relationship between the
Company, Mr. Marasco and Larval Corporation was revealed to the market.
The investing public, recognizing that a majority of the Company's
revenues in fiscal year 2001 were generated via sales to a related
party, reacted swiftly and severely. By the close of business on
February 4, Company shares had lost 51% of their value, falling $3.41
per share to $3.29 in unusually heavy trading. Four days later, Grant
Thornton LLP resigned its position as the Company's independent auditor
after only two weeks. Grant Thornton served as the Company's auditors
from January 24, 2002 through February 8, 2002.
For more information, contact Darin R. Morgan or Kimberly A. Walker by
Mail: 1622 Locust Street, Philadelphia, PA 19103 by Phone: 888-891-2289
or 215-875-3000 by Fax: 215-875-5715 by E-mail: InvestorProtect@bm.net
or visit the firm's Web site: http://www.bergermontague.com
MEDI-HUT CO.: Charles Piven Commences Securities Suit in New Jersey
-------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Medi-Hut Co., Inc.
(Nasdaq:MHUT) securities between April 4, 2000 and February 4, 2002,
inclusive, in the US District Court for the District of New Jersey,
against the Company and:
(1) Joseph A. Sanpietro, President and Chief Executive Officer,
(2) Laurence M. Simon, Chief Financial Officer,
(3) Robert Russo, Treasurer,
(4) Vincent Sanpietro, Secretary,
(5) James G. Aaron, director, and
(6) James S. Vacarro, director
The suit charges that defendants violated the federal securities laws
by issuing a series of materially false and misleading statements to
the market throughout the class period which statements had the effect
of artificially inflating the market price of the Company's securities.
For more information, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-332-0030 by E-mail at hoffman@pivenlaw.com
or visit the firm's Web site: http://www.pivenlaw.com
NEWPOWER HOLDINGS: Labels NY Securities Fraud Suits "Without Merit"
-------------------------------------------------------------------
NewPower Holdings, Inc. (NYSE: NPW) labeled "without merit" the
securities class action pending against the Company and its officers,
directors and underwriters in the US District Court for the Southern
District of New York.
The suit, filed on behalf of purchasers of the Company's securities
between October 5,2000 and December 5,2001, alleges that defendants
violated the federal securities laws by issuing a series of materially
false and misleading statements to the market throughout the class
period which statements had the effect of artificially inflating the
market price of the Company's securities.
The Company has yet to be served with a copy of the complaint, but
based on the press release from plaintiffs' counsel, NewPower intends
to defend vigorously against such claims.
NEWPOWER HOLDINGS: Marc Henzel Initiates Securities Suit in S.D. NY
-------------------------------------------------------------------
The Law Offices 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 all individuals and institutional investors that
purchased the common stock of NewPower Holdings, Inc. (NYSE: NPW)
between October 5, 2000 and December 5, 2001, inclusive.
The suit charges the Company and its officers and directors with
violations of the Securities Exchange Act of 1934. In addition, the
Company, its officers and directors, as well as underwriters of its
October 5, 2000 initial public offering, are also charged with
violations of the Securities Act of 1933.
The suit alleges that the Company, a nationwide provider of electrical
power and natural gas formed by Enron in 1999, engaged in a pattern of
misleadingly described policies and transactions throughout the class
period that served to mask the true nature of the Company's business,
and its financial condition.
Specifically, the suit alleges that the defendants made numerous false
and misleading statements concerning NewPower's ability to succeed in a
volatile energy market through sophisticated risk management strategies
conceived and largely managed by its affiliate, Enron Energy Services,
Inc. (EES), an Enron subsidiary.
The suit asserts that neither EES nor the Company had identified any
hedging strategies that could enable the Company to operate profitably
under market conditions prevailing at the time of the IPO or, indeed,
at any time thereafter.
Moreover, as the complaint details, despite representations in the IPO
Prospectus designed to portray Enron and its affiliates as long-term
investors in the Company and believers in its prospects for success,
Enron, through its CFO, Andrew Fastow, had set up a partnership known
as "Raptor III," whose purpose was to hedge Enron's position against
such an anticipated decline in Company stock.
Although the prospectus purported to describe fully the relationship
between Enron, its affiliates, and NewPower, and all of their related
party transactions, it failed to fully disclose the extremely troubling
and material Raptor transactions. As a result of these various
misrepresentations and omissions, the IPO garnered net proceeds to the
Company of $543 million.
In addition, certain defendants made numerous statements concerning the
Company's financial performance throughout the class period that
falsely attributed disappointing results to factors beyond the
Company's control. As the complaint charges, they schemed to omit
mention of the true reasons the Company was drastically cutting costs -
i.e., that it did not have its claimed hedging system against high
prices in place (either independently or with the aid of Enron), and
that collateral obligations carried a material risk of loss, thereby
sapping the Company's ability to tap enough resources to successfully
carry out its business plan.
Thereafter, in connection with the collapse of Enron amid scandal in
the fall of 2001, the Company and other defendants belatedly began to
disclose that they had no substantial hedges in place, and that,
contrary to their repeated representations, a substantial portion (and
perhaps all) of the enormous collateral they had posted was at risk of
loss.
The suit alleges that defendants have now admitted in filings made by
them with Securities and Exchange Commission that the Registration
Statements were false and misleading in that they failed to disclose
that, contrary to defendants' prior representations, the collateral
postings were not guaranteed to return to NewPower completely or even
substantially (as had been previously represented), but were at risk of
being seized by the creditor, Enron.
The Company misrepresented the true risk the Enron forward contracts
presented because the revelation of the truth would have led to
investor suspicions about the very viability of its business plan, its
ability to hedge against higher prices, the adequacy of its liquid
resources, and the fairness of its dealings with Enron.
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 Web site: http://members.aol.com/mhenzel182
NEWPOWER HOLDINGS: Abraham Paskowitz Expands Claims in Securities Suit
----------------------------------------------------------------------
Abraham & Paskowitz expanded its investigation into the allegations set
forth in the class action it filed earlier this week on behalf of
investors in NewPower Holdings, Inc. (NYSE: NPW) common stock from
October 5,2000 to December 5,2001 in the US District Court for the
Southern District of New York.
The expanded investigation includes issues pertaining to certain energy
pricing contracts in the PJM Interconnection region, the Company's
relationships with certain strategic partners, and investment banker
and underwriter conflicts of interests.
The firm has also formally communicated a request to NewPower, through
its counsel, that no documents be discarded or destroyed that will be
potentially important to this action, including e-mail files, and tape
and video recordings.
For further details, contact Laurence Paskowitz or Eva Chatty by Mail:
One Pennsylvania Plaza, Suite 1910 New York, NY 10119 by Phone:
800-938-0015 by E-mail: classattorney@aol.com or visit the firm's Web
site: http://www.classactionsonline.com
NEWPOWER HOLDINGS: Charles Piven Initiates Securities Suit in S.D. NY
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The Law Offices Of Charles J. Piven, PA lodged a securities class
action on behalf of shareholders who acquired NewPower Holdings, Inc.
(NYSE:NPW) securities between October 5, 2000 and December 5, 2001,
inclusive, in the US District Court for the Southern District of New
York, against the Company and certain of its officers and/or directors.
The suit charges that defendants violated the federal securities laws
by issuing a series of materially false and misleading statements to
the market throughout the class period which statements had the effect
of artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-332-0030 by E-mail: hoffman@pivenlaw.com
or visit the firm's Web site: http://www.pivenlaw.com
NVIDIA CORPORATION: Marc Henzel Commences Securities Suit in N.D. CA
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Northern District of
California on behalf of purchasers of NVIDIA Corp. (Nasdaq: NVDA)
common stock during the period between Feb. 15, 2000 and Feb. 14, 2002.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The suit
alleges that as part of their effort to boost the price of Company
stock, defendants misrepresented the Company's true prospects in an
effort to conceal its improper acts until they were able to sell at
least $66 million worth of their own stock.
In order to overstate revenues and assets in its 4th Quarter 2000 and
the 1st, 2nd and 3rd quarters 2001, NVIDIA violated generally accepted
accounting principles and SEC rules by engaging in an illegal
accounting scheme. This scheme had the effect of dramatically
overstating revenues and assets.
Then, on February 14, 2002 (after the close of the market), the Company
partially admitted that its past accounting for its prior results may
be inaccurate in a press release entitled, "NVIDIA Corporation
Conducting Review of Certain Transactions at the Request of the SEC."
On this news the Company's shares plummeted the following day.
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 Web site: http://members.aol.com/mhenzel182
NVIDIA CORPORATION: Weiss Yourman Commences Securities Suit in N.D. CA
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Weiss and Yourman initiated a securities class action in United States
District Court for the Northern District of California on behalf of
purchasers of NVIDIA Corporation (Nasdaq: NVDA) common stock between
February 15, 2000 and February 14, 2002, inclusive.
The suit alleges that the Company, and certain of its officers and
directors violated the Securities Exchange Act of 1934 by violating
GAAP and misrepresenting the Company's true prospects, in an effort to
boost the price of Company stock, until they were able to sell at least
$66 million worth of their own personal holdings.
The suit alleges that as a result of the defendants' conduct, plaintiff
and other members of the class suffered damages.
For more information, contact Weiss & Yourman by Phone: 800-437-7918 by
E-mail: wyinfo@wyca.com or visit the firm's Web site:
http://www.wyca.com
PDI INC.: Marc S. Henzel Commences Securities Fraud Suit in New Jersey
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The Law Offices of Marc S. Henzel initiated a securities class action
on behalf of purchasers of the securities of PDI Inc. (NASDAQ: PDII)
between May 22, 2001 and November 12, 2001 inclusive. The action is
pending in the United States District Court for the District of New
Jersey against the Company and:
(1) Charles C. Saldarini (CEO and Co-Chairman) and
(2) Bernard C. Boyle (CFO)
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market between May 22, 2001 and November 12, 2001.
As alleged in the complaint, on May 22, 2001 the Company held a
conference call regarding a previously announced agreement with
Novartis AG, under which it would market and sell Novartis' Lotensin
and Lotrel, two hypertension medications. During the conference call,
defendants represented that they expect the Novartis contract to add
$0.25 per share to the Company's fourth quarter of 2001 results.
That statement was, according to the complaint, materially false and
misleading because defendants knew, or were reckless in not knowing,
that the Company's marketing program would not be fully underway until
well into the fourth quarter and that therefore, the agreement could
not contribute materially to its fourth quarter of 2001 performance.
In addition, according to the complaint, the Company materially misled
the investing public to the true impact that the introduction of
generic competition for Ceftin, a drug which the Company was
distributing under contract with GlaxoSmithKline PLC (Glaxo), would
have on its business.
In particular, the suit alleges that defendants represented, in an
August 23, 2001 conference call, that the Company expected Ceftin to
contribute $0.30-$0.40 earnings per share to the fourth quarter of
2001, even if a generic form of Ceftin was introduced during that time.
According to the complaint, the statements were materially false and
misleading because defendants knew, or were reckless in not knowing,
that Ceftin could not contribute $0.30 per share to fourth quarter 2001
earnings.
On November 12, 2001, the Company issued a press release announcing a
net loss of $17.3 million, or $1.24 for the third quarter of 2001,
including a $24 million charge as reserves for expenses associated with
the Ceftin contract, which the Company announced would be terminated
shortly. In addition, the Company announced that the Lotensin program
will be completed late in the fourth quarter and would not contribute
materially to its 2001 earnings. On November 13, 2001, defendants held
a conference call revealing that Ceftin would not contribute any profit
to the fourth quarter of 2001.
In reaction to the news, the price of the Company's common stock
plummeted from a $29 per share close on November 12, 2001 to close at
$18.35 per share, a drop of 35%.
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 Web site: http://members.aol.com/mhenzel182
PNC FINANCIAL: Marc Henzel Lodges Securities Suit in W.D. Pennsylvania
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Western District of
Pennsylvania on behalf of all purchasers of the common stock of PNC
Financial Services Group, Inc. (NYSE: PNC) from July 19, 2001 through
January 29, 2002, inclusive.
The suit charges the Company, certain of its officers and directors,
and its auditor and consultant Ernst & Young, LLP (E&Y) with violations
of the Securities Exchange Act of 1934. The suit alleges that during
the class period, defendants misrepresented the Company's financial
results and issued false and misleading statements with regard to its
financial condition.
Defendants failed to properly consolidate liabilities associated with
three subsidiaries PNC had established with American Insurance Group
(AIG). Throughout the class period, defendants misrepresented the
Company's earnings as well as its ability to reduce its liabilities
related to non-performing assets. In fact, PNC's failure to conform
with proper accounting standards produced inflated earnings and misled
investors as to the Company's true financial condition.
The suit further alleges that while acting as auditor and a consultant
for the Company, E&Y was also acting as a consultant for AIG. In fact,
as the Company's auditor, E&Y approved its transactions with AIG while
at the same time acting as an "accounting adviser" to AIG. E&Y drew up
the financial structure for the subsidiaries in question and approved
them for implementation by AIG. E&Y also issued a letter that helped
AIG pitch its product to banks.
On January 29, 2002, PNC announced that the Federal Reserve Board had
contacted the Company about accounting inaccuracies and as a result,
its financial results for 2nd and 3rd quarter 2001 would be restated
and its financial results for 4th Quarter 2001 would be revised.
The Company also stated that the updated financials would result in
year-end earnings being reduced $155 million to approximately $412
million, or $1.38 a share. The Company also revealed that these
accounting adjustments would cause its non-performing assets to rise by
$125 million to $393 million. In addition, the Company announced that
the Federal Reserve Board and the SEC were making inquiries about its
transactions and that it would cooperate with their investigations.
These disclosures shocked the market, causing PNC stock to close on
January 29, 2002 down $5.79 or nearly 10% at $56.08 in extremely heavy
trading volume of 6,305,100 shares.
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 Web site: http://members.aol.com/mhenzel182
RHYTHMS NETCONNECTIONS: Marc Henzel Commences Securities Suit in CO
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the District of Colorado on
behalf of purchasers of Rhythms NetConnections, Inc. (OTC: RTHMQ)
publicly traded securities during the period between January 6, 2000
and April 2, 2001, inclusive.
The suit charges the Company and certain of its officers and directors
with issuing a series of material misrepresentations to the market.
Throughout the class period, the Company portrayed itself as a fast-
growing and expanding provider of DSL services and repeatedly
represented that it could continue to expand its broadband network
throughout the United States and reassured investors that it was
financially able to continue this expansion.
As alleged in the suit, defendants' statements issued throughout the
class period were materially false and misleading when made as they
failed to disclose the following adverse facts which were then known to
defendants or recklessly disregarded by them:
(1) that the Company lacked the financial resources necessary to
execute its business plan of a full national network
expansion;
(2) that the Company's efforts to scale back its expansion plans
were not meeting with success as the Company was unable to
generate the necessary financing;
(3) that the Company was not well-funded or well-positioned to
continue its growth, as the Company's expenses, including its
ongoing debt payment obligations, were far outpacing its
revenues and rapidly depleting the Company's cash reserves;
(4) that the Company did not have adequate cash reserves and was
not sufficiently "stable" and "financially strong" that it
would be able to fund the Company's operational needs into the
first quarter of 2002, as defendants repeatedly promised
investors - defendants were not even able to keep the Company
running through 2001, as it had earlier guaranteed, and
(5) that without the influx of additional capital, the Company
would be forced to seek bankruptcy protection, which would
render the Company's common stock worthless.
While in possession of the true facts about the Company and its
business, the individual defendants and other insiders collectively
sold 600,000 shares of common stock for gross proceeds in excess of $16
million. Over $12.6 million alone was received by defendant Catherine
Hapka. The Company raised hundreds of millions of dollars in preferred
stock sales and debt issuances.
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 Web site: http://members.aol.com/mhenzel182
SPLASH TECHNOLOGY: Faces Suit For Artificially Inflating Stock Price
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Plaintiffs in two class actions against Splash Technology Holdings,
Inc. have appealed a lower court's decision to dismiss the suits,
without giving them leave to amend, in the 9th Circuit Court of
Appeals.
The suits were commenced in January 1999 against the Company, several
of its directors and executives and some of its selling shareholders,
alleging, among other things, that the defendants made or were
responsible for material misstatements, and failed to disclose
information concerning Splash's business, finances and future business
prospects, that resulted in artificially inflating the Company's stock.
The suits also named as defendant Digital Origins, Inc., which the
Company acquired, and alleges that Digital Origins engaged in a scheme
to artificially inflate the price of Splash common stock to reap an
artificially large return on the sale of the common stock in order to
pay off its debt.
The defendants vigorously deny all allegations of wrongdoing and intend
to aggressively defend themselves in these matters.
SUPREMA SPECIALTIES: Berman DeValerio Commences Securities Suit in NJ
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Berman DeValerio Pease Tabacco Burt and Pucillo initiated a securities
class action against Suprema Specialties, Inc. (Nasdaq: CHEZ) and six
of its top executives, alleging they artificially inflated the
Company's stock price by issuing misleading financial statements.
The suit, filed in the US District Court for New Jersey on behalf of
all investors who bought Company stock from August 8, 2001 through
December 21, 2001, alleges the defendants inflated the Company's stock
price during the class period by issuing false and misleading
statements about its finances.
According to the lawsuit, the deception began in August 2001 when
company announced "record" results for the fourth quarter and year-end
of 2001. In September 2001, Suprema filed statements with the US
Securities and Exchange Commission saying it was issuing 3.5 million
shares of stock to the public. The suit alleges that two of the
individual defendants reaped more than $4.6 million from sales of their
shares at that time.
In November 2001, the Company again trumpeted its results for the first
quarter of 2002. However, just one month later, the plaintiff says,
news of the deception was revealed. In a December 24, 2001 statement,
Suprema announced the resignation of its chief financial officer and
controller and said it had begun an investigation into its past
financial results. Nasdaq halted trading in Company shares the same
day.
For more details, contact Chauncey D. Steele IV by Mail: One Liberty
Square, Boston, MA 02109 by Phone: 800-516-9926 by E-mail:
law@bermanesq.com or visit the firm's Web site:
http://www.bermanesq.com.
TAKE-TWO INTERACTIVE: Sued For Securities Act Violations in S.D. NY
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Take-Two Interactive Software, Inc. vowed to vigorously defend against
six class actions filed in December 2001 and January 2002 in the United
States District Court for the Southern District of New York against the
Company and certain of its officers or directors asserting damages on
behalf of all purchasers of the Company's common stock during February
24, 2000 through December 17, 2001.
The suits allege violations of Section 10 (b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the
Company and the individual defendants and violations of Section 20 (a)
of the Exchange Act by the individual defendants.
The suits further allege that because Take-Two's financial statements
issued during the class period were not prepared in conformity with
generally accepted accounting principles, the defendants concealed
adverse material information and made or participated in the making of
untrue statements of material facts and omitted to state material facts
concerning the business, financial condition, operations and future
prospects of the Company.
The Company cannot predict the ultimate outcome of these actions and
stated that an unfavorable resolution could have a material adverse
effect on our financial condition, cash flows and results of
operations.
TRAVELOCITY.COM: Shareholders File Suit Opposing Sabre Tender Offer
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Travelocity.com Inc. faces eleven securities class actions pending in
the Delaware Court of Chancery, relating to the recent announcement by
Sabre Inc. that it intends to initiate a tender offer for the Company's
stock.
On February 19, Sabre announced its intention to initiate, on or soon
after March 5, a cash tender offer to purchase for $23 per share the
approximately 30 percent stake in the Company that Sabre does not
already own. The various stockholder lawsuits seek, among other things,
to enjoin the prospective tender offer on the grounds that the price
offered by Sabre is inadequate.
Two additional stockholder class action lawsuits have also been filed
in State District Court in Tarrant County, Texas.
The Company's Board of Directors has formed a special committee
comprised of independent and outside directors to review and evaluate
the Sabre proposal.
VAN WAGONER: Denies Allegations in Multiple Securities Suit in E.D. WI
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Van Wagoner Funds, Inc. labeled "without merit" several securities
class actions pending in the United States District Court for the
Eastern District of Wisconsin, on behalf of investors who, between
April 28, 2000 and June 30, 2001, inclusive, purchased shares in the
Van Wagoner Emerging Growth Fund.
The suit names as the Fund, its managers and administrators, and its
auditors, as defendants, and charges them with violating the federal
securities laws by issuing materially false and misleading registration
statements and prospectuses.
Specifically, the complaint alleges that defendants issued materially
false and misleading statements concerning the Fund's net asset value
(NAV) and performance. These statements were materially false and
misleading because:
(1) the NAV of the Fund was materially overstated as the Fund had
overvalued a material portion of their holdings of certain
private placement investments;
(2) the Fund's performance was materially overstated as those
figures were based on the overstated Fund's NAV figures; and
(3) the risk of investing in the Fund was materially understated
as the Fund had failed to disclose the true risk attendant to
its portfolio securities.
Accordingly, defendants' statements about the risks associated with
investing in the Fund were not meaningful because they failed to advise
investors that the Fund was materially overstating its NAV.
Although the Company has not yet responded to these actions, the
Company intends to defend the actions vigorously. Because of the
preliminary stage of these actions, the outcome cannot be predicted.
However, the Company does not believe that the outcome of such actions
will have a material adverse effect on the results of operations or the
net asset value of the Funds.
WILLIAMS COMPANIES: Employees File Suit Over Losses In Retirement Plans
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Tulsa law firm Richardson, Stoops, Richardson and Ward has filed a
class action against Williams Companies, Inc., on behalf of its current
and former employees, whose retirement accounts have been depleted by a
dramatic decline in the company's stock price.
The suit is one among many similar class actions filed against the
Company when its stock price plummeted after the revelation of
previously undisclosed risks associated with about $2.4 billion of
Williams-backed debt for former subsidiary Williams Communications
Group, the Tulsa World reported recently. Williams Communications
Group said earlier this week that it may declare Chapter 11 bankruptcy.
If Williams Communications cannot pay its debts, the Company may be
forced to satisfy more than $2 billion of liabilities.
The suit accuses the Company and directors of its retirement plan of
jeopardizing the retirement savings of their employees. Employees were
encouraged to invest their retirement funds in the Company's stock, but
were not told of the debt and its potential impact on the Company's
stock. The suit adds that more than 65 percent of the Company's
retirement contributions were tied up in stock in 1999.
These losses are huge, Fred Stoops, Sr., partner in the firm, said.
"There is a fiduciary duty owed to the pensioners to invest wisely."
Company employees "were misled and deprived of their opportunity to
make an informed judgment as to their investment in company stock," the
suit asserts.
Company officials have said the lawsuits have no merit. They contend
the company properly disclosed its WCG obligations long ago.
Mr. Stoops also asserted that the suits are likely to be consolidated,
and prominent New York law firm Milberg Weiss Bershad Hynes and Lerach
could take the lead counsel position due to its experience and
qualifications in securities litigation. According to Mr. Stoops,
Milberg Weiss may be the best qualified to handle the case, "They are
better qualified than any other firm could possibly be."
*********
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.
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