/raid1/www/Hosts/bankrupt/CAR_Public/020627.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, June 27, 2002, Vol. 4, No. 126
Headlines
APARTHEID LITIGATION: Swiss Govt Scrutinizing Suit Against Top Banks
CANADA: Windsor Facing Potential Suit Over Three-day Kingsville Fire
CANDLE-LITE: Recalls 80,000 Potpourri Simmering Pots For Burn Hazard
CREDIT CARDS: Trial in Retailers' Antitrust Suit Set For April 2003
CREDIT SUISSE: Court Refuses To Dismiss MDCM Holdings Securities Suit
DAPHNE FERNWOOD: Settles Suit For $625T for Mishandling of Remains
HOME DEPOT: GA Judge Ends Consent Decree Due To Satisfactory Compliance
MARCOS WEALTH: Hawaii Judge Orders Swiss Financier's Testimony In Suit
MOBILE PHONES: MD Court Says Injury Suits Should Stay in Federal Courts
MOUNTAIN SAFETY: Recalls 9,700 Gasoline Fuel Cans For Injury Hazard
MUSIC INDUSTRY: CA Court Approves $4.75M Settlement of Royalties Suit
OIL COMPANIES: Australian Court Allows Suit Over 1999 Crisis to Proceed
OMNICOM GROUP: Works To Defend Reputation After WSJ Report, Class Suits
PEREGRINE SYSTEMS: Employees Sue For Stock Purchase Plan Participants
POLAND: NY Court Dismisses Suit Seeking Reparations For WWI Survivors
SOUTHERN PETROLEUM: New Zealand Court Allows Securities Suit To Proceed
SPEARFISH KFC: Settles Federal Sexual Harassment Lawsuit for $10,000
TREASURE CHEST: Settles For $2.6M NJ Riverboat Casino Air Quality Suit
*More Lawyers Choosing State Courts Over Federal Courts For Suits
New Securities Fraud Cases
360NETWORKS INC.: Shalov Stone Commences Securities Suit in S.D. NY
ADELPHIA BUSINESS: Marc Henzel Commences Securities Suit in E.D. PA
ALCATEL SA: Wolf Haldenstein Commences Securities Fraud Suit in S.D. NY
APPLIED DIGITAL: Marc Henzel Commences Securities Fraud Suit in S.D. NY
CMS ENERGY: Shalov Stone Commences Securities Fraud Suit in E.D. MI
CMS ENERGY: Marc Henzel Commences Securities Fraud Suit in E.D. MI
CORPPRO COMPANY: Charles Piven Commences Securities Suit in E.D. OH
DUKE ENERGY: Marc Henzel Commences Securities Fraud Suit in S.D. NY
DYNEGY INC.: Marc Henzel Commences Securities Fraud Suit in S.D. TX
EDISON SCHOOLS: Shalov Stone Commences Securities Fraud Suit in S.D. NY
EXELON CORPORATION: Marc Henzel Commences Securities Suit in N.D. IL
FLEXTRONICS INTERNATIONAL: Marc Henzel Launches Securities Suit in NY
FLEXTRONICS INTERNATIONAL: Scott + Scott Lodges Securities Suit in NY
GREAT ATLANTIC: Marc Henzel Commences Securities Suit in New Jersey
HALLIBURTON COMPANY: Marc Henzel Commences Securities Suit in N.D. TX
KNIGHT TRADING: Marc Henzel Files Securities Fraud Suit in New Jersey
KNIGHT TRADING: Shalov Stone Commences Securities Fraud Suit in NJ
LIGHT MANAGEMENT: Wolf Haldenstein Commences Securities Suit in S.D. NY
LIGHT MANAGEMENT: Marc Henzel Commences Securities Suit in S.D. NY
MERRILL LYNCH: Marc Henzel Commences Securities Fraud Suit in S.D. NY
MERRILL LYNCH: Shalov Stone Commences Securities Fraud Suit in S.D. NY
MERRILL LYNCH: Marc Henzel Commences Securities Fraud Suit in S.D. NY
MIRANT CORPORATION: Wolf Popper Commences Securities Suit in N.D. GA
MONTANA POWER: Cauley Geller Commences Securities Fraud Suit in Montana
MUTUAL RISK: Schiffrin & Barroway Lodges Securities Fraud Suit in CA
OMNICOM GROUP: Marc Henzel Commences Securities Fraud Suit in S.D. NY
OMNICOM GROUP: Shalov Stone Commences Securities Fraud Suit in S.D. NY
PEROT SYSTEMS: Marc Henzel Commences Securities Fraud Suit in N.D. TX
RELIANT RESOURCES: Marc Henzel Commences Securities Suit in S.D. TX
WORLDCOM INC.: Lovell & Stewart To File Amended Securities Fraud Suit
*********
APARTHEID LITIGATION: Swiss Govt Scrutinizing Suit Against Top Banks
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The Swiss government will examine the suits filed for reparations
against top Swiss banks Credit Suisse Group and UBS AG because of their
business dealings with South Africa's apartheid regime, AFX reports.
The Swiss President and Finance Minister, Kaspar Villiger said that the
issue will be considered during a regular cabinet meeting on Wednesday.
Pres. Villiger declined to comment on the details of the class actions
filed by the US attorney Ed Fagan in New York last week, seeking
billions of dollars in compensation on behalf of apartheid victims.
"We think Swiss policy at the time was not, in comparison with other
countries, a special case," Pres. Villiger told AFX.
Mr. Fagan succeeded in forcing Swiss banks to pay out US$1.25B in
compensation claims to Holocaust survivors in the 1990s, triggering
international pressure on Switzerland to account for its record during
World War II. "The potential damages could exceed, by far, all the
Holocaust cases," he told a Swiss newspaper on Sunday.
CANADA: Windsor Facing Potential Suit Over Three-day Kingsville Fire
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The municipality of Windsor in Ontario, Canada faces a potential
multimillion class action, filed by owners and tenants of a 110,000-
square-foot industrial facility, which was destroyed in a three-day
fire, the Windsor Star reports.
The Ontario Fire Marshal's office is investigating the blaze, suspected
to have been started by an electrical problem in a warehouse section
which took up the bulk of the Horti-Pak Inc. facility. The town lists
the registered owner as a numbered company, 1099029 Ontario Ltd., with
Hercules Tool & Mould and a trucking company, Transflex, sharing the
building with Horti-Pak.
Windsor Lawyer Harvey Strosberg told the Windsor Star that the
municipality itself is a potential target. "It's too early to
speculate on that . we don't rule anyone or anybody out," he said.
"The potential here is enormous. There could be losses in the tens of
millions - multimillions for certain."
Kingsville organic farmer Jim Ludwig worried the fallout from the black
soot that poured out of the burning plastics plant for several days
could put him out of business for years. His farm lies outside the
area that was evacuated under a municipal state of emergency, but Mr.
Ludwig said "a real heavy plume" covered his farm during part of the
disaster.
Mr. Ludwig, who is also a professional toxicologist, has taken samples
to be analyzed and said if tests turn up toxic levels of contamination,
he could lose this year's produce and the next three years' worth of
crops as he tries to regain his farm's organic certification, the
Windsor Star reports.
Mr. Strosberg said residents were inconvenienced by two evacuations and
now face property damage, cleanup costs and worries over potential
toxic effects. Businesses forced to close incurred losses and crops
are now threatened, he told the Star.
CANDLE-LITE: Recalls 80,000 Potpourri Simmering Pots For Burn Hazard
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Candle-Lite is cooperating with the US Consumer Product Safety
Commission (CPSC) by voluntarily recalling about 80,000 ceramic
potpourri simmering pots sold under the Martha Stewart Everydayr Brand.
Flames from the tea light candles inside these potpourri pots can flare
out of the side ventilation holes, possibly causing burns to consumers.
The Company has received nine reports of tea lights overheating. One
consumer received minor burns while attempting to extinguish a tea
light.
The recalled potpourri simmering pots are six-sided, white ceramic,
three-piece units measuring about 6-inches high. The base is the tea
light candleholder. The potpourri pot is placed on the base to heat
the potpourri and water mixture inside. The lid to the pot has six
holes to allow the heated mixture's aroma to escape. A label on the
bottom of the base reads, "MADE IN CHINA."
Kmart sold the pots nationwide from September 2001 through March 2002
for about US$5.
For more information, contact the Company by Phone: 800-718-7151
between 8:30 am and 5:30 pm ET Monday through Friday, or visit the
Company's Website: http://www.candle-lite.com
CREDIT CARDS: Trial in Retailers' Antitrust Suit Set For April 2003
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A New York federal court has scheduled an April 28, 2003 trial for the
antitrust class action filed against major credit card companies,
Mastercard International and Visa USA, iWon.com reports.
The suit was filed in 1996 by several retailers, including Wal-mart
Stores, Inc., alleging the companies forced them to accept debit cards,
which have higher transaction fees. The suit has been granted class
action status, a decision the defendants appealed. The New York
Supreme Court, however, rejected the appeal, allowing the suit to
proceed.
The New York court will hear a request from the credit card companies
for a summary judgment on the matter on December 13, aMasterCard
spokeswoman told the Associated Press.
CREDIT SUISSE: Court Refuses To Dismiss MDCM Holdings Securities Suit
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A New York federal judge refused to dismiss a securities suit against
Credit Suisse First Boston Corp., charging the bank with unlawful
initial public offering practices, Dow Jones reports. Company client
MDCM Holdings Inc., filed the suit on behalf of creditors of failed
Internet concern Mortgage.com, accusing the Company of receiving
kickbacks from customers in exchange for greater IPO allotments.
Earlier this year, the Company agreed to pay $100 million to settle
Securities and Exchange Commission allegations that it allocated shares
of hard-to-get "hot" IPOs in 1999 and 2000 to customers in exchange for
a hefty portion of the customers' profits on IPO trades. The Company
did not admit or deny wrongdoing in settling the suit.
According to a Dow Jones report, the Company brought Mortgage.com
public in August 1999 in an offering that raised $59.5 million. The
Company's shares nearly tripled within two weeks of the IPO, then
declined steeply. Nasdaq delisted the shares last year after trading
below $1 for a month.
MDCM claims that the firm deliberately underpriced IPO shares so that
it could allocate undervalued shares to favored clients and receive
additional compensation. The suit seeks class-action status on behalf
of Internet-related and high-tech companies that hired the Company to
underwrite their offerings from Jan. 1, 1998, to Oct. 31, 2000.
The Company asked the court to dismiss the suit, saying it was
"meritless." However, Judge Shira Scheindlin of the Southern District
of New York upheld the suit, saying MDCM has adequately alleged
numerous claims, including breach of fiduciary duty and unjust
enrichment.
A CSFB spokesman declined to comment on the ruling, Dow Jones reports.
DAPHNE FERNWOOD: Settles Suit For $625T for Mishandling of Remains
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The Daphne Fernwood Cemetery in Mill Valley agreed to pay US$625,000 to
settle a suit, accusing it of mishandling cremated remains by using
ashes from a trash can to top off urns, the Associated Press
Newswires reports.
The Cemetery also will give $1.25 million to set up a charitable
foundation to provide legal and medical services to the poor and pay
$125,000 for the plaintiffs' legal fees. "The case would not have been
resolved without going to the Supreme Court," said plaintiffs' attorney
David Schwartz. "For the sake of time, and for some of the plaintiffs,
it's better what we have today."
The Cemetery's operators denied the charges, and a number of witnesses
said they never saw anything improper at the cemetery. Lawyers for
the Cemetery declined comment.
The settlement was reached in November, but remains tentative until an
arbitrator decides who should pay the legal fees of any future
plaintiffs in the class action. Retired Judge Edward Stern, who
is arbitrating the issue, said that he would resolve the question in
July.
The 14-year-old case, originally filed by famed attorney Melvin Belli,
accused the Cemetery of mishandling remains between 1975 and 1988. Mr.
Belli later left the case owing to a conflict of interest, he also
represented a fired worker who sued the cemetery for wrongful
termination and became a key witness in the class action.
That worker, Daniel Aquilino, testified that he would put excess
remains in a garbage can kept in the processing room and would use them
to "top off" urns that were not full. He also testified that he and a
co-worker discovered that excess ashes would sometimes be scattered on
a hillside in the cemetery. Jay Avis, a mortician who also worked for
Fernwood, corroborated Mr. Aquilino's story.
George Prather, an expert witness in the funeral and mortuary industry,
testified that before 1980, it was common practice in the industry to
return a "symbolic" amount of the remains to family members and discard
whatever didn't fit. Cemetery co-operator Virginia Daphne testified
that she told Mr. Aquilino to use two urns if all the ashes didn't fit
in one.
Mr. Aquilino testified that the cemetery solved this problem by
ordering larger urns, but "topping off" unfilled urns with ashes from
the trash can became more common.
After a month-long arbitration, Judge Stern found that the plaintiffs
had not proven with "substantial certainty" that the mishandled remains
were those of their loved ones. The plaintiffs could have taken the
case to court at that point, but decided to settle instead.
HOME DEPOT: GA Judge Ends Consent Decree Due To Satisfactory Compliance
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A Georgia federal court ended a four-year court supervision of Home
Depot, Inc.'s employment practices, saying the Company exhibited a
"genuine and enthusiastic" compliance with the settlement of a sex
discrimination class action, SignOnSanDiego.com reports.
The suit alleged that women were more likely to get cashier jobs than
sales jobs at the Company's stores, making it harder for them to win
promotions to supervisor or manager positions. The plaintiffs and the
Company entered into a consent decree in 1998, which required the
Company to boost the number of women it hires for higher-level store
jobs. The company also agreed to pay US$65 million to more than 6,000
female employees and ex-employees.
Lawyers for both sides of the case told federal judge Susan Illston
that the Company had exceeded the benchmarks set by the consent decree
for the most recent six-month period. Judge Illston said she ended the
order more than a year early because the company is meeting its goals.
"I do think you've done a remarkable job," she told Company lawyers.
"The people in charge of the company took it to heart."
The 1998 agreement, which was set to expire in September 2003, covers
stores in 10 Western US states, SignOnSanDiego.com reports.
MARCOS WEALTH: Hawaii Judge Orders Swiss Financier's Testimony In Suit
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A Swiss financier who reportedly managed former Philippine president
Ferdinand Marcos' assets, has been ordered to give a deposition to
attorneys trying to enforce a US$3.1 billion judgment against Mr.
Marcos, the Associated Press Newswires reports.
The deposition of Jean-Louis Sunier is ordered for Saturday in Munich,
Germany. The order, signed by visiting US District Court Judge Manuel
Real, in Hawaii, also calls for sanctions of up to $10,000 per day if
Mr. Sunier continues to dodge attorneys. An attorney for Mr. Sunier
has not returned telephone messages seeking comment.
Mr. Sunier refused to testify, insisting that, under international law,
he cannot be compelled to testify outside his home country. He also
argues that he is bound by "professional secrecy," which prohibits him
from disclosing information about bank accounts. Sherry Broder, an
attorney representing Filipinos who successfully sued the Marcos
estate, said Mr. Sunier should not be protected by the legendary
privacy of Switzerland's banking system.
"We need to move ahead and recover the Marcos assets, and we believe
the Swiss financial institutions should not be a safe haven for
torturers and tyrants around the world," Ms. Broder said.
Attorneys trying to enforce the judgment want Mr. Sunier's testimony
because he worked at a Swiss bank where an agent for Mr. Marcos opened
an account in 1972, Ms. Broder said. Mr. Sunier has said his testimony
would not add anything to the case because Mr. Marcos' home was looted
after his fall from power and all necessary documents are in the hands
of the plaintiffs.
A class action by 9,539 Filipinos was filed against the Marcos estate
in 1986, the year he was deposed and fled to Hawaii. He died in 1989.
In 1995, a Honolulu jury awarded plaintiffs US$2 billion after finding
Mr. Marcos responsible for summary executions, disappearances and
torture. The judgment has been stalled in court and has grown to about
US$3.1 billion, including interest.
MOBILE PHONES: MD Court Says Injury Suits Should Stay in Federal Courts
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A Maryland federal court ruled that five class actions against the
wireless communications industry should remain in the federal court's
jurisdiction, the Wireless Week reports.
The suits, brought by defendants in Maryland, Pennsylvania, New York,
and Louisiana, alleging personal injury due to the use of cellular
phones. The same court also is hearing the so-called Newman case, in
which a neurologist claims his brain tumor resulted from use of
wireless phone technology.
The ruling is a victory for the wireless industry because it keeps the
suits from being taken up by various state courts and avoids what could
be numerous and conflicting rulings, a Verizon spokeswoman told
Wireless Week. Federal judge Catherine C. Blake said the class actions
"have only one goal - to challenge in state court the validity and
sufficiency of the federal regulations on radio frequency radiation
from wireless phones." The cases, she said:
(1) ask state courts to declare phones that have met FCC safety
regulations as "unreasonably dangerous;"
(2) have cell phone makers held liable for selling phones without
headsets;
(3) require cell phone makers to provide free headsets to users
and put consumer warnings about the "dangers" of using FCC-
compliant phones.
None of the numerous studies conducted on the mobile-phone health issue
prove that mobile phone use is hazardous to human health. In a report
to Congress last year, the US General Accounting office recommended
more study be done to better understand the health effects of RF
radiation on the human body. The World Health Organization also last
year said the topic needs more research, the Wireless Week reports.
Judge Blake said those goals are aimed squarely at challenging federal
laws. "Because plaintiff's suits are a disguised attack on federal law
in an area of national importance, the court will exercise
jurisdiction," she says.
MOUNTAIN SAFETY: Recalls 9,700 Gasoline Fuel Cans For Injury Hazard
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Mountain Safety Research is cooperating with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 9,700 cans of
white gasoline stove fuel. Corrosion can cause the can to leak fuel,
posing a fire or injury hazard. The Company has received 20 reports of
leaking fuel cans, but no injuries have been reported.
The recalled fuel includes MSR White Premium Blend Stove Fuel. The
fuel is packaged in red metal cans, with the words "MSR.White Gas" and
"1 Quart/.95 Liter" are printed across the front of the can. This
recall includes batch number 2003-2, and the batch number is printed on
the lower front of the can. The fuel cans were made in the US.
REI and other sporting good stores sold the stove fuel nationwide from
March 2002 to June 2002 for about US$4.
Consumers should check their stove fuel cans for leaks immediately. If
the can is leaking, consumers should move it to a location free of
ignition sources, then transfer the fuel to an approved fuel container.
Whether or not the can is leaking, consumers should contact the Company
to receive a replacement fuel container.
For more information, contact the Company by Phone: 800-531-9531
between 8 am and 4 pm PT Monday through Friday or visit the Company's
Website: http://www.msrcorp.com.
MUSIC INDUSTRY: CA Court Approves $4.75M Settlement of Royalties Suit
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The Los Angeles Superior Court approved a US$4.75 million settlement to
a class action filed over royalties owed by Decca Records, now a unit
of Vivendi Universal, to several artists led by late singer Peggy Lee,
the Associated Press reports.
The suit includes as a class about 160 artists, many of whom are now
dead, such as Pearl Bailey, Louis Armstrong, Billie Holiday, Patsy
Cline, Ella Fitzgerald, the Andrews Sisters and Bill Haley and the
Comets. The suit alleges that the Company failed to pay the artist
millions of dollars by underreporting sales figures and overcharging
for services.
Last May, actor and "Dallas" star Larry Hagman objected to the suit
settlement, saying it was "too low." Mr. Hagman, who is also the son
of Broadway star Mary Martin, said "It seems rather unusual that $4.75
million would be used to compensate what has been done to so many
outstanding artists in American history."
However, Los Angeles Superior Court Judge Victoria Chaney ruled that
the settlement was fair because it followed extensive mediated
bargaining and because only a small percentage of class members had
objected, according to an AP report. Ms. Lee's lawyer Cyrus Godfrey
told reporters that barring further legal wrangling, the money could
start being paid out in 90 days.
Mr. Godfrey added that he hoped Mr. Hagman "realizes he's interfered
with this enough. I thought his objection was utterly and completely
without merit."
OIL COMPANIES: Australian Court Allows Suit Over 1999 Crisis to Proceed
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An Australian High Court allowed class actions pending in the Victorian
Supreme Court against oil giants Mobil and Esso Australia to proceed,
dismissing Mobil Oil Australia's claim that legislation passed by the
Victorian government in 2000 to enable class actions was invalid.
Law firms Slater and Gordon and Maurice Blackburn Cashman began a class
action against Mobil Oil Australia in 2000 over the 1999 avgas aviation
fuel contamination crisis. The crisis grounded thousands of small
piston-engined aircraft which had used Mobil aviation gasolene from its
Altona refiner in Victoria between November 21 and December 23.
The law firms are also involved in action against Esso Australia taken
by Victorian businesses and residents affected by the 1998 Longford gas
plant explosion.
Mobil argued that an amendment to the Victorian Supreme Court Act was
beyond the legislative power of the Victorian government, and
incompatible with the judicial power of the Victorian Supreme Court.
If the motion was upheld, it would have stopped class actions from
being brought in Victoria.
However, five of the six judges totally rejected Mobil's claim.
Justice Ian Callinan agreed the legislation was valid but sought
provisions on the legislation that would have limited all class action
claims to Victorian residents and businesses.
Slater and Gordon partner Lisa Nichols said the decision validated the
Victorian Supreme Court provisions, which were similar to those of the
federal court. "Class actions provide a cost-effective way to treat
large-scale claims, allowing individuals to take on large corporations
with equality," she said.
"Importantly, that legal mechanism now remains available to
Victorians.Similarly, it is unlikely that the Supreme Court of Victoria
will face a flood of class actions."
OMNICOM GROUP: Works To Defend Reputation After WSJ Report, Class Suits
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Omnicom Group, Inc. is working hard to defend its reputation and
restore shareholder confidence, after more securities class actions
were filed against the ad holding company, alleging that it made
"material misrepresentations" to shareholders, reiterating published
concerns about the Company's accounting practices and its handling of
the transfer of Internet assets into a newly formed entity called
Seneca, adweek.com reports.
The suits pending in the United States District Court for the Southern
District of New York now total seven, after the Wall Street Journal's
featured report questioning the Company's financials. After the report
was published, the Company's stock slid by 30%, hitting an all-time low
of $50.94 on June 13, according to an Adweek report. Last week,
Company stock closed at US$53.04, off 1.08 percent from its closing
price the day before.
Company executives have met with analysts from top investment houses
such as Merrill Lynch, Bear Stearns and Salomon Smith Barney to
counteract the Wall Street Journal's questions on its financial
integrity. On June 16, the Company briefed board members on efforts to
manage through the current crisis.
Adweek.com reports that the day after, the Company announced that it
complied with an informal request from the Securities and Exchange
Commission for information related to its recent change in auditors and
the resignation of two board members. The Company also disclosed that
John Wren, Omnicom's CEO, and Randy Weisenburger, its Chief Financial
Officer, made a $2.2 million vote of confidence in the company, with
each buying 20,000 shares in it at $55.10 a share on June 13.
PEREGRINE SYSTEMS: Employees Sue For Stock Purchase Plan Participants
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Beleaguered Peregrine Systems, Inc. faces another lawsuit filed by
three of the 1,400 employees it laid off last week, on behalf of all
workers who participated in the Company's employee stock purchase plan
from June 1999 through May 6, 2002.
The Company already faces several securities class actions in the
United States District Court for the Southern District of California,
which arose after it admitted to overstating as much as US$100 million
in revenue over nearly three years.
The suit filed yesterday alleges that the Company entered into some
questionable deals as part of a "buddy system" designed to help it
inflate revenue, SignOnSanDiego.com reports. One type of deal, the
suit said, involved "channel stuffing." Like many software companies,
the Company works with partners who resell its products to end users.
The suit alleges that the Company shipped software to resellers and
recorded the transactions as revenue before those partners found
buyers.
The suit also alleged that the Company inflated revenue through
software swaps - also known as "Barney deals," and named 10 companies
that participated in these questionable partnerships.
The suit emphasizes on a software swap between the Company and San
Francisco-based Critical Path, where the Company agreed to buy out an
existing royalty obligation to Critical Path for $2.85 million and buy
an additional $240,500 worth of software. In exchange, Critical Path
agreed to buy $4 million of software and services from the Company -
$2.6 million more than Critical Path was set to purchase just days
before, the suit states.
The Company would not comment on the lawsuit yesterday. According to a
SignOnSanDiego report, the Company has offered many of its laid-off
employees a severance package that amounts to one week of base pay, in
return for them agreeing not to say or write anything that would
disparage the Company or sue it or any of its workers. The employees
who filed the class-action suit have not signed the agreements.
POLAND: NY Court Dismisses Suit Seeking Reparations For WWI Survivors
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A federal judge has dismissed a lawsuit brought by Holocaust survivors
and their heirs accusing the Polish government and its treasury
department of refusing to return real estate lost during World War II,
according to a recent report by the Associated Press Newswires.
In a 40-page ruling, filed in a federal court in Brooklyn, US District
Court Judge Edward Korman found that international law bars the
plaintiffs from suing a foreign government in a US court even though
their claim may be valid. "I am compelled to dismiss the complaint not
because of a determination that the conduct challenged here is lawful,"
Judge Korman wrote. "The conduct alleged may very well violate the
evolving standards of the law of nations."
Judge Korman said he was dismissing the complaint "solely because the
Republic of Poland and its Ministry of the Treasury may not be required
to defend the cause of action alleged in the complaint in the United
States."
The class action was filed on behalf of 11 plaintiffs, including some
who were driven out of Poland in what the lawsuit called "a common
scheme of ethnic and racial cleansing." The suit alleged that the
victims were never allowed to return to reclaim homes and other assets
in Warsaw, Krakow and other parts of the country.
The lawsuit accused Polish officials of taking "illegal title to
assets, including real property, of all the expunged Jewish people in
Poland under the pretense that such assets were abandoned."
SOUTHERN PETROLEUM: New Zealand Court Allows Securities Suit To Proceed
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Auckland High Court allowed an insider-trading case against Southern
Petroleum to proceed, saying it was arguable under New Zealand's
Securities Amendment Act, the New Zealand Herald Reports.
The suit, which started seven years ago, was filed by 750 former
shareholders of Fletcher Energy, which was bought by the Company in
1995. The shareholders allege Fletcher Energy withheld information
about Southern Petroleum's prospects.
The plaintiffs want to recoup the difference between the 75c a share
that they were paid and the $1.25 they claim the shares were worth,
plus penalties and interest. Shareholders involved in the action are
seeking over $20 million, but more than 6000 shareholders would be able
to piggyback on the claim if it was successful.
However, the case is unlikely to be pursued by other disgruntled
shareholders because of the difficulties they face in taking a class
action, according to a Herald report. Bruce Sheppard, chairman of the
New Zealand Shareholders' Association, said many small shareholders
could have a similar claim but there were huge difficulties.
Small shareholders were disadvantaged during a takeover bid, although
the situation had improved under the Takeovers Code. He said the case
would be unlikely to open a floodgate of claims. "They would have to
have a lot of money (to take the claim), an advocate prepared to put in
the effort and be able to hold a disparate group together.The
convergence of those three things, I suspect, would be very rare," he
told the Herald.
Tony Gavigan, on behalf of the shareholders, said he believed prospects
for success were very good. Shell spokesman Simon King said the
company believed very strongly the case would ultimately be dismissed,
and it was reviewing appeal options.
SPEARFISH KFC: Settles Federal Sexual Harassment Lawsuit for $10,000
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The owners of the Spearfish, South Dakota Kentucky Fried Chicken agreed
to settle for more than $10,000 a federal sexual-harassment suit, filed
by the Equal Employment Opportunity Commission (EEOC) on behalf of the
restaurant's female employees, the Rapid City Journal reports.
The suit alleged that former KFC manager Rick Jones sexually harassed
young female employees in 1998, by making improper comments and sexual
innuendo. The suit also mentions as a plaintiff Victoria Hothem, who
alleged that Mr. Jones harassed her during duty hours shortly after she
was hired and subjected her to unwanted sexual contact. Ms. Hothem
resigned from the Company as a result.
Joe Oleinik, owner of the restaurant under the business name of The
Colonel of Spearfish, agreed to pay US$10,100 to six employees named in
the suit, as well as an undisclosed sum to Ms. Hothem, his attorney,
Mike Day told the Rapid City Journal.
"There was no determination that the owners did anything wrong," Mr.
Day said. "There were allegations about an employee. We had sexual-
harassment policies in place. Once we discovered those allegations, we
fired him."
Regional EEOC attorney Joseph Mitchell told the Journal that the
Spearfish restaurant owners cooperated with the EEOC and hoped this
would serve as an example to others. "We hope this settlement will
encourage all employers to work toward resolving employment
discrimination problems and ensuring that all employees work in a
harassment-free environment," he said.
TREASURE CHEST: Settles For $2.6M NJ Riverboat Casino Air Quality Suit
----------------------------------------------------------------------
The Treasure Chest casino in Kenner, New Jersey has agreed to settle a
class action filed by about 1,000 of its current and former employees
over the riverboat's air quality for $2,600,000, the Associated Press
reports. The suit was commenced in January 1996, alleging that the
casino's ventilation system was faulty and re-circulated smoky air
through the casino, sickening employees.
Under the settlement signed by US District Judge Mary Ann Vial Lemmon,
plaintiffs will receive amounts ranging from US$200 to $130,000,
according to how long they worked at the casino, whether they have
smoked and the severity of their ailments. However, people connected
with the case were prohibited from talking about the settlement.
Rob Stillwell, a spokesman for Boyd Gaming Corp., the Las Vegas-based
company that bought the Treasure Chest in October 1997, told AP he had
no comment. Scott Bickford, an attorney representing the workers,
would only say that the settlement is "good for the individuals."
The suit was handled under the Jones Act, a 1920 federal law that
permits merchant seamen to sue their employers over working conditions.
Shoreside workers are not allowed to sue their employers under
Occupational Health and Safety Administration rules, but instead must
file for workers compensation if they have a problem.
Whether other riverboat casino workers could bring lawsuits under the
Jones Act is unclear. Riverboat casinos are no longer required to sail
under Louisiana law. The Casino Association of Louisiana, a riverboat
industry group, said courts have not tested whether the employees
aboard the vessels would be considered maritime workers.
"Since we've gone dockside, I don't think we've had any litigation that
would test that," Wade Duty, executive director of the association,
told the Associated Press.
*More Lawyers Choosing State Courts Over Federal Courts For Suits
------------------------------------------------------------------
Lawyers increasingly are choosing state courts over federal courts when
filing class actions, the Charleston Gazette reports. They believe the
state venues provide the better chance for larger settlements or larger
judgments if the case goes to trial. That is why the US Chamber of
Commerce is supporting legislation to send to federal courts any
lawsuit seeking damages in excess of $2 million.
Meanwhile, the Madison County courthouse in Edwardsville, Illinois,
sees more class actions than any jurisdiction, except Los Angeles
County and Cook County, which includes Chicago, according to an
analysis by the Manhattan Institute, a conservative think tank.
Paul Weiss, an attorney with the Chicago-based law firm of Freed &
Weiss, estimates he has 100 class actions pending nationwide, more than
30 of which are in Madison County. Mr. Weiss says the reason is
simple. The court gives "great recoveries for the class."
Class actions bring together many people, sometimes millions, who claim
they have been similarly injured by a company or product. Settlements
vary greatly, with some reaching billions of dollars. Lawyers typically
take as attorneys' fees a percentage of the settlement.
Critics of class actions, like James Wooton, president of the
Washington-based Chamber of Commerce's Institute for Legal Reform, says
attorneys for class actions are more interested in searching for
sympathetic local judges and juries than in looking for evidence to
support a claim of wrongdoing. However, attorneys like Paul Weiss say,
that is not so. They are simply looking for the best place to right a
corporate wrong.
For example, recently, a state court jury in Miami ordered three
cigarette makers to pay $37.5 million in damages to a man who lost his
tongue to cancer. It was an outgrowth of a $145 billion punitive
damage award issued in a class action covering all sick Florida
smokers.
Another example, in Madison County, Ameritech reached a settlement with
an estimated potential value of $350 million in services and cash in a
case stemming from the phone company's charges to maintain wires in
customers' homes. The lawyers who brought the lawsuit received more
than $14 million in fees.
Rex Carr, one of the attorneys in the Ameritech case, acknowledges that
while class actions can be highly profitable, they also benefit the
consumers. The bottom line in the Ameritech case is the company had to
stop unfairly charging customers. The effects of the suit are not
limited only to the payout.
William Schroeder, a law professor at Southern Illinois University
Carbondale, said Madison County's "pro-plaintiffs environment" has much
to do with the area's working-class residents, their history of
struggling with lost factory jobs and resulting anger with the
corporations. Professor Schroeder indicated it was natural that
"lawyers are going to attempt to bring their lawsuits in an environment
where they are most likely to prevail."
Lawyers also say places like Madison County are getting more class
action cases because state rules often make it easier for such lawsuits
to be certified. In addition, the attorneys say, since state judges
typically are elected, they may be more sensitive to how a case will
play with the voters, whereas, federal judges have lifetime
appointments.
With overwhelming Republican support, the House voted 233 to 190, this
year, to send to the Democratic-led Senate a federal courts bill like
the one pressed by the Chamber of Commerce. Senator Orrin Hatch of
Utah, senior Republican on the Senate Judiciary Committee, said "the
problem is there is hardly a Democrat in the Senate who will support
it."
Under current rules, a federal court may exercise jurisdiction only if
all defendants in the suit are residents of different states from all
named plaintiffs. Each individual claim also must be at least
US$75,000 for a federal court to handle it as a class action. The new
legislation would require any class action seeking damages in excess of
$2 million for the class to go to federal court.
New Securities Fraud Cases
360NETWORKS INC.: Shalov Stone Commences Securities Suit in S.D. NY
-------------------------------------------------------------------
Shalov Stone & Bonner LLP initiated a securities class action on behalf
of investors who purchased the securities of 360Networks, Inc.
(NASDAQ:TSIX and NASDAQ:TSIXQ and TSE:TSX) in the period from November
8, 2000 to June 28, 2001, inclusive, in the United States District
Court for the Southern District of New York.
The complaint alleges that the Company and certain of its officers made
material misrepresentations and omissions of material facts concerning
the Company's financial condition and business performance during the
relevant time.
According to the complaint, the defendants knew or recklessly
disregarded that the company was overstating revenues and assets by a
vast amount during the class period. As a result, investors have
suffered substantial losses.
For more details, contact Ralph M. Stone by Mail: 485 Seventh Avenue,
Suite 1000, New York, New York 10018 by Phone: 212-239-4340 or by E-
mail: rstone@lawssb.com
ADELPHIA BUSINESS: Marc Henzel Commences Securities Suit in E.D. PA
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Eastern District of Pennsylvania,
on behalf of purchasers of the securities of Adelphia Business
Solutions, Inc. (OTC: ABIZQ.PK) between January 6, 2000 and March 27,
2002, inclusive. The action is pending against:
(1) John J. Rigas (Chairman),
(2) Timothy Rigas (CFO, Vice Chairman, Treasurer and a director),
(3) Michael J. Rigas (Vice Chairman, Secretary and a director) and
(4) James P. Rigas (CEO, Vice Chairman, President and a director)
Adelphia Solutions filed for bankruptcy protection on March 27, 2002
and is not named as a defendant in this action.
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 a series of material misrepresentations to the
market between January 6, 2000 and March 27, 2002, thereby artificially
inflating the price of Adelphia Solutions securities.
The complaint alleges that, among other things, throughout the class
period, Adelphia Solutions engaged in deceptive sales practices, which
artificially inflated the reported number of telecommunications lines
that it sold.
In addition, the complaint alleges that defendants improperly caused
Adelphia Solutions to pay the overhead expenses of Adelphia
Communications Inc. (Adelphia Communications), a company controlled by
defendants which maintained important business ties with Adelphia
Solutions and on which Adelphia Solutions depended.
Furthermore, according to the complaint, defendants failed to disclose
that Adelphia Communications had in excess of $2 billion in off-balance
sheet liabilities. On March 1, 2002, Adelphia Solutions announced that
it will default on interest payments on certain secured notes.
Subsequently, on March 27, 2002, defendants disclosed that Adelphia
Communications, along with another entity controlled by defendants, was
liable for $2.3 billion of previously undisclosed debt. On that same
day, Adelphia Solutions filed for bankruptcy.
For more details, 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
ALCATEL SA: Wolf Haldenstein Commences Securities Fraud Suit in S.D. NY
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Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the Southern District of
New York, on behalf of
(1) purchasers of the American Depositary Shares (ADSs) of Alcatel
relating to Alcatel's Class O common shares (Nasdaq: ALAO) in
or traceable to the initial public offering (IPO) of the ADSs
conducted by Alcatel on or about October 20, 2000, or
(2) the purchasers of Alcatel's Class A (NYSE: ALA) and Class O
common shares in the form of ADSs between October 20, 2000 and
May 29, 2001, against defendants Alcatel and certain of its
officers and directors.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
On October 20, 2000, Alcatel issued a prospectus for the sale of Class
O stock in the form of American Depositary Shares (ADSs) that
supposedly would follow the execution of Alcatel's Optronics Division.
The suit alleges that the prospectus was materially false and
misleading because it neglected to divulge that the Company's optical
components demand was weakening resulting from the Optronics Division's
clients occurrences of relentless business slowdowns.
Furthermore, it is alleged that the increasing demand for the Optronics
Division's optical components reported resulted from an immense
inventory development at the Optical Division's clients, including its
primary client, Alcatel.
The suit alleges that the prospectus also failed to note hundreds of
millions of dollars of obsolete inventory which would have to be
written-off by the Company and that Alcatel would not be able to
effectively support sales of all product lines to external customers,
considering the eroding demand for optical components.
Alcatel announced an unanticipated and serious profit warning on May
29, 2001, as well as announcing that it estimated a second-quarter loss
of approximately $2.6 billion. Subsequently, the price of Alcatel Class
O common shares, in the form of ADSs, declined by 11% from a closing
price of $21.26 on May 29, 2001 to a closing price of $18.92 on May 30,
2001. Likewise, Alcatel Class A common shares, in the form of ADSs
declined by 8.8% from $27.14 to 24.74.
For more details, contact Gregory M. Nespole, 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 Alcatel.
APPLIED DIGITAL: Marc Henzel Commences Securities Fraud 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
Florida on behalf of purchasers of the securities of Applied Digital
Solutions, Inc. (Nasdaq: ADSXE) between February 11, 2000, and May 10,
2002, inclusive.
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 materially false and misleading
statements to the market between February 11, 2000 and May 10, 2002.
According to the complaint, defendants were in possession of materially
adverse information concerning the lack of proper accounting controls
and improper revenue recognition practices at certain of the Company's
subsidiaries, but failed to disclose the information to investors for
more than two years.
On April 18, 2002, the Company disclosed that during the year ending
December 31, 2001, one of the Company's subsidiaries had been booking
revenue without "evidence of customer acceptance prior to the
recognition of certain revenue." The Company also disclosed that the
subsidiary "did not have proper restrictions to vendor access within
its accounts payable system."
Additionally, the Company disclosed that during the year ended December
31, 2000, a second subsidiary "lacked monitoring controls over its
accounts receivable and was unable to provide certain detailed
inventory listings for certain general ledger balances." The
disclosure of improper accounting practices at the Company's
subsidiaries drove Company stock down 40%.
Approximately three weeks later, on May 9, 2002, defendants claimed
that nearly every major hospital in the West Palm Beach, Florida, area
would be equipped with VeriChip scanners -- an indispensable component
of the Company's VeriChip technology. However, not one hospital in West
Palm Beach or anywhere else had accepted or agreed to use a scanner, an
essential device for retrieving the VeriChip's information.
One day later, on May 10, 2002, when the truth was disclosed that no
hospital had accepted a scanner, Company stock fell sharply, dropping
nearly 30% in one day.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave,
Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888-643-6735 or
610-660-8000 by Fax: 610-660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
CMS ENERGY: Shalov Stone Commences Securities Fraud Suit in E.D. MI
-------------------------------------------------------------------
Shalov Stone & Bonner LLP lodged a securities class action in the
United States District Court for the Eastern District of Michigan, on
behalf of purchasers of the securities of CMS Energy Corporation
(NYSE:CMS) between August 3, 2000 and May 10, 2002, inclusive, against
the Company and certain of its officers and directors.
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 August 3, 2000 and May 10, 2002.
According to the complaint, the Company had, throughout the class
period, improperly recognized approximately $4.4 billion in revenues by
engaging in transactions lacking any economic substance using what are
known as "round-trip" trading transactions.
The improperly recognized revenues were, according to the complaint,
reported in the Company's quarterly and annual press releases and in
financial filings with the Securities and Exchange Commission (SEC),
throughout the class period.
On May 10, 2002, the Company announced that the SEC was investigating
the propriety of its "round-trip" trading practices. In response to
the announcement, the Company's common stock price collapsed, falling
from a high of $20.06 on May 10, 2002 to a low of $15.72 on May 13,
2002, a drop of more than 21% on extremely heavy trading volume.
For more details, contact Lauren Fishman by Mail: 485 Seventh Avenue,
Suite 1000, New York, New York 10018 by Phone: 212-239-4340 by Fax:
212-239-4310 or by E-mail: lfishman@lawssb.com
CMS ENERGY: Marc Henzel Commences Securities Fraud Suit in E.D. MI
------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Eastern District of
Michigan, on behalf of purchasers of the securities of CMS Energy
Corp., (NYSE: CMS) between August 3, 2000 and May 10, 2002 inclusive,
against the Company and:
(1) William T. McCormick Jr. (Chairman and CEO),
(2) David W. Joos (President and Chief Operating Officer) and
(3) Alan M. Wright (Chief Financial and Administrative Officer)
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 August 3, 2000 and May 10, 2002.
According to the complaint, the Company had, throughout the Class
Period, improperly recognized approximately $4.4 billion in revenues by
engaging in transactions lacking any economic substance using what are
known as "round-trip" trading transactions.
The improperly recognized revenues were, according to the complaint,
reported in the Company's quarterly and annual press releases and in
financial filings with the Securities and Exchange Commission (SEC),
throughout the class period.
On May 10, 2002, the Company announced that the SEC was investigating
the propriety of its "round-trip" trading practices.
In response to the announcement, Company stock price collapsed, falling
from a high of $20.06 on May 10, 2002 to a low of $15.72 on May 13,
2002, a drop of more than 21% on extremely heavy trading volume.
For more details, 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
CORPPRO COMPANY: Charles Piven Commences Securities Suit in E.D. OH
-------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who acquired Corppro Companies, Inc.
(AMEX:CO) securities between April 1, 2000 and March 20, 2002,
inclusive, in the United States District Court for the Eastern District
of Ohio, against the Company and certain of its officers and directors.
The action charges that defendants violated 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, PA by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
DUKE ENERGY: Marc Henzel Commences Securities Fraud 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 against Duke Energy Corporation (NYSE: DUK) and certain of its
principal officers and directors on behalf of all persons or entities
who purchased the Company's common stock between July 22, 1999 and May
17, 2002.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, throughout the class
period, defendants issued numerous statements and filed quarterly and
annual reports with the SEC which described the Company's increasing
revenues and financial performance. These statements were materially
false and misleading because they failed to disclose and/or
misrepresented the following adverse facts, among others:
(1) that the Company had engaged in approximately $1 billion of
"round-trip" energy trades that provided no economic benefit
for the Company;
(2) that the Company lacked the necessary internal controls to
adequately monitor the trading of its power; and
(3) that as a result, the value of the Company's revenues and
financial results were materially overstated at all relevant
times.
On May 17, 2002, the last day of the class period, the Company issued a
press release announcing that it had "analyzed its trades for the
three-year period from 1999 through 2001 to identify those trades which
may have some of the characteristics of sell/buy-back trades." These
trades, known as "round- trip" or "wash" transactions, involve the
simultaneous buying and trading of power in the same price and same
amount and provide no economic benefit to the Company.
Following this announcement, and the disclosure of inquiries by both
the Federal Regulatory Commission and the Securities and Exchange
Commission, the market price of Company stock fell to $30.05 per share,
after reaching a split-adjusted class period high of $44.97 on November
30, 2000.
For more details, 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
DYNEGY INC.: Marc Henzel Commences Securities Fraud Suit in S.D. TX
-------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Southern District of Texas
on behalf of purchasers of Dynegy, Inc. (NYSE: DYN) publicly traded
securities during the period between April 17, 2001 and April 24, 2002.
The complaint charges the Company and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
complaint alleges that the Company and its top officers inflated the
price of the Company's stock in order to pursue an accelerated
securities sale program.
Defendants knew that concealing the Company's true vehicle, Project
Alpha, for creating cash flow from operations and the true impact it
would have on the Company provided the only way that they could foster
the perception in the business community that the Company was not
"Enron Corp.," i.e., the only way it could post the revenue and
earnings per share growth claimed by defendants.
Prior to the class period, the individual defendants realized that many
of their complicated deals to generate reported net income did not
generate cash flows. The defendants knew that investors would
eventually discover this discrepancy and the Company's stock price
would collapse.
To prevent this, the Company classified what was essentially a loan
from CitiGroup Inc. as an operating activity rather than as a financing
activity as required by Generally Accepted Accounting Principles. The
defendants' wrongful course of business:
(1) artificially inflated the price of Company stock during the
class period;
(2) deceived the investing public, including plaintiff and other
class members, into acquiring Company securities at
artificially inflated prices;
(3) allowed the individual defendants to extract millions of
dollars in bonuses for creating the appearance of the
Company's phenomenal cash flow from operations growth; and
(4) allowed the Company to sell nearly half a billion dollars of
its own securities to the unsuspecting public.
For more details, 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
EDISON SCHOOLS: Shalov Stone Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
Shalov Stone & Bonner LLP expanded the securities class action pending
in the United States District Court for the Southern District of New
York on behalf of Edison Schools investors (NASDAQ: EDSN) to include
investors who purchased Company securities in the period from November
11, 1999 to May 14, 2002. The new complaint names as defendants the
Company and:
(1) Chris Whittle,
(2) Christopher Cerf,
(3) Adam Field, and
(4) PricewaterhouseCoopers, LLP, the Company's auditor
The complaint alleges that the defendants made material
misrepresentations and omissions of material facts concerning the
Company's financial condition and business performance during the
relevant time. According to the suit, the defendants knew or
recklessly disregarded that the Company was overstating revenues, among
other things.
In February 2002, it was revealed that the Company was improperly
recognizing revenue. On May 14, 2002, the Company announced that it
had been the subject of an SEC investigation concerning its improper
accounting and revenue recognition.
In addition, the Company announced that it had entered into a
settlement with the SEC, pursuant to which the Company would reclassify
its revenues for numerous prior reporting periods, thereby
acknowledging that prior financial statements were false and
misleading.
For more details, contact Jill M. Levy by Mail: 485 Seventh Avenue,
Suite 1000 New York, New York 10018 by Phone: 212-239-4340 or by E-
mail: jlevy@lawssb.com
EXELON CORPORATION: Marc Henzel Commences Securities Suit in N.D. IL
--------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Northern District of
Illinois, Eastern Division, on behalf of purchasers of the securities
of Exelon Corporation, (NYSE: EXC) between April 24, 2001 and September
27, 2001 inclusive. The action, is pending against:
(1) Corbin A. McNeill, Jr. (Co-CEO and Chairman),
(2) John W. Rowe (Co-CEO and President) and
(3) Ruth Ann Gillis (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 April 24, 2001 and September 27, 2001.
The complaint alleges that the Company repeatedly issued statements
concerning the strength of its operations and repeatedly assured the
market that it would meet or beat its $4.50 per share earnings figure
for 2001.
The complaint alleges that these statements were materially false and
misleading because they failed to disclose, among other things:
(i) that the investments in telecommunications companies held by
Exelon's Enterprises segment were plummeting in value at a
rapid pace. Accordingly, Enterprises could not and would not
meaningfully contribute to the Company's results and, in fact,
the Company was carrying tens of millions of dollars of
impaired investments on its financial statements; and
(ii) that InfraSource, Exelon's infrastructure subsidiary, was
experiencing declining demand for its products as its primary
customers, telecommunications companies, were facing severe
industry-wide problems, such as mounting debt and over-
capacity, and were significantly cutting back on their capital
expenditures.
On September 27, 2001, the Company issued a press release announcing
that it would not meet its earnings commitment of $4.50 for 2001,
blaming the economy, poor weather and write-downs for failed
investments made by the Enterprises unit.
In reaction to the announcement, Company common stock price plunged by
22%, falling to a low of $38.85 per share on September 27, 2001, after
closing at $50.45 the previous day, on extremely heavy trading volume.
For more details, 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
FLEXTRONICS INTERNATIONAL: Marc Henzel Launches Securities Suit in NY
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, Southern District of New York, on
behalf of purchasers of the securities of Flextronics International
Ltd. (Nasdaq: FLEX) between October 2, 2001 and June 4, 2002,
inclusive, against the Company and:
(1) Michael E. Marks,
(2) Michael Mcnamara and
(3) Robert R. B. Dykes
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 a series of material misrepresentations to the
market between October 2, 2001 and June 4, 2002, thereby artificially
inflating the price of Company securities.
The complaint alleges that the Company failed to disclose that its
business and operations were being negatively affected by a host of
adverse factors, including, but not limited to, the following:
(i) that the Company was experiencing declining sales as its
business began to be affected by adverse market forces.
Throughout the class period, defendants repeatedly emphasized
that the Company was not being affected by the slowdown in the
US or global economy, when, in fact, that was not true;
(ii) throughout the class period, many of the Company's customers
were experiencing severe financial difficulty such that it was
highly foreseeable that they would be unable to complete
anticipated sales, thereby causing the Company to suffer a
decline in its revenues. At all times throughout the class
period, defendants lacked a reasonable basis upon which to
publish and/or affirm the revenue guidance they provided to
analysts and investors; and
(iii) defendants had purposely and/or recklessly under-reported the
amount of financing needed to complete the Company's
restructuring and over-stated the status of the completion of
this reorganization, as well as made false statements
concerning the Company's financial and operational condition
because it was critical that defendants raise cash by selling
more equity during the upcoming months.
On June 4, 2002, the last day of the class period, defendants shocked
the market when they finally revealed that the restructuring, which was
purportedly paid for in October 2001 and substantially completed
thereafter, was still far from complete. Defendants now admitted that
there were at least an additional $150 million in restructuring charges
that must be recorded.
In addition, defendants also stated that they could not possibly meet
the Company's previous earnings and revenue forecasts for its first
fiscal quarter 2003.
In response to this negative announcement, the price of Company stock
dropped precipitously, falling from $12.32 per share to as low as $9.50
per share, a decline of almost 23%, on tremendous volume of 47 million
Company shares traded.
For more details, 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
FLEXTRONICS INTERNATIONAL: Scott + Scott Lodges Securities Suit in NY
---------------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action on behalf of
purchasers of the securities of Flextronics International Ltd. (Nasdaq:
FLEX ) between October 2, 2001 and June 4, 2002, inclusive, in the
United States District Court, Southern District of New York against the
Company and:
(1) Michael E. Marks,
(2) Michael Mcnamara and
(3) Robert R. B. Dykes.
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated there
under, by issuing a series of material misrepresentations to the market
between October 2, 2001 and June 4, 2002, thereby artificially
inflating the price of Company securities.
The complaint alleges that the Company failed to disclose that its
business and operations were being negatively affected by a host of
adverse factors, including, but not limited to, the following:
(i) that the Company was experiencing declining sales as its
business began to be affected by adverse market forces.
Throughout the class period, defendants repeatedly emphasized
that the Company was not being affected by the slowdown in the
US or global economy, when, in fact, that was not true;
(ii) throughout the class period, many of the Company's customers
were experiencing severe financial difficulty such that it was
highly foreseeable that they would be unable to complete
anticipated sales, thereby causing the Company to suffer a
decline in its revenues. At all times throughout the class
period, defendants lacked a reasonable basis upon which to
publish and/or affirm the revenue guidance they provided to
analysts and investors; and
(iii) defendants had purposely and/or recklessly under-reported the
amount of financing needed to complete the Company's
restructuring and over-stated the status of the completion of
this reorganization, as well as made false statements
concerning the Company's financial and operational condition
because it was critical that defendants raise cash by selling
more equity during the upcoming months.
On June 4, 2002, the last day of the class period, defendants shocked
the market when they finally revealed that the restructuring, which was
purportedly paid for in October 2001 and substantially completed
thereafter, was still far from complete.
Defendants now admitted that there were at least an additional $150
million in restructuring charges that must be recorded. In addition,
defendants also stated that they could not possibly meet the Company's
previous earnings and revenue forecasts for its first fiscal quarter
2003.
In response to this negative announcement, the price of Company stock
dropped precipitously, falling from $12.32 per share to as low as $9.50
per share, a decline of almost 23%, on tremendous volume of 47 million
Company shares traded.
For more details, contact Neil Rothstein or David R. Scott by Phone:
800-404-7770 by E-mail: nrothstein@scott-scott.com or drscott@scott-
scott.com or visit the firm's Website: http://www.scott-scott.com
GREAT ATLANTIC: Marc Henzel Commences Securities Suit in New Jersey
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of New Jersey, on behalf
of purchasers of the securities of Great Atlantic & Pacific Tea
Company, Inc. (NYSE: GAP) between November 15, 2001 and May 28, 2002,
inclusive. The action is pending against the Company and:
(1) Christian W.E. Haub,
(2) Elizabeth Culligan,
(3) Fred Corrado,
(4) Mitchell Goldstein and
(5) Kenneth A. Uhl
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 a series of material misrepresentations to the
market between November 15, 2001 and May 28, 2002, thereby artificially
inflating the price of Company securities.
Throughout the class period, as alleged in the complaint, defendants
issued statements regarding the Company's quarterly and annual
financial performance and filed reports confirming such performance
with the United States Securities and Exchange Commission (SEC).
The complaint alleges that these statements were materially false and
misleading because, among other things:
(i) the Company was employing improper accounting practices
regarding the recognition of vendor allowances and the
accounting of inventory in certain of its regions for fiscal
year 2001 in violation of Generally Accepted Accounting
Principles. As a result, the Company's operating results were
materially misrepresented and overstated; and
(ii) based on the foregoing, defendants' statements concerning the
prospects of the Company were lacking in a reasonable basis at
all times.
On May 28, 2002, the last day of the class period, the Company
announced that it would delay the filing of its annual report with the
SEC while it conducted an accounting review which will most likely
result in a charge to earnings. The accounting review will focus on
the appropriate timing for the recognition of vendor allowances and the
accounting of inventory in certain of the Company's regions for fiscal
year 2001.
The Company further noted that a substantial portion of any charge it
will take will reverse credits which were recognized prematurely as
reductions of cost of merchandise sold, and that portion will therefore
be recognized in periods subsequent to fiscal 2001 as reductions of
cost of merchandise sold.
Following this disclosure, Company stock fell $4.03 per share, or
approximately 16%, to close on May 28, 2002 at $21.070 per share.
For more details, 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
HALLIBURTON COMPANY: Marc Henzel Commences Securities Suit in N.D. TX
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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 Texas
on behalf of purchasers of Halliburton Company (NYSE: HAL) publicly
traded securities during the period between July 22, 1999 and May 28,
2002, inclusive.
The complaint charges that the Company violated Section 10(b) 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 July 22, 1999 and May 28, 2002.
As alleged in the complaint, beginning in the fourth quarter of 1998,
unbeknownst to the public, the Company materially changed its revenue
recognition policy to recognize revenue on claims and change orders
relating to cost-overruns which its clients had not approved.
Previously, the Company would only recognize revenue on approved change
orders or claims.
The suit further alleges that the alteration of the Company's
accounting policy and financial results reported as a result thereof
throughout the class period were materially false and misleading and in
violation of Generally Accepted Accounting Principles (GAAP) because,
among other things, the accounting change was not disclosed to the
public or supported as the preferred accounting treatment in the
Company's financial statements and because collection of the claims or
change orders was not probable and the amounts involved could not be
estimated reliably.
As a result of these violations of GAAP, according to the complaint,
the Company's quarterly and annual earnings press releases and
financial reports filed with the Securities and Exchange Commission
(SEC) throughout the class period were materially false and misleading
and artificially inflated the Company's reported revenues and earnings,
thereby artificially inflating the price of Company securities.
On May 28, 2002, after the close of the market, the Company issued a
press release announcing that the SEC is conducting an investigation
into its accounting for cost overruns. In reaction to the press
release, the price of its common stock dropped by 3.3% in one day on
extremely heavy trading volume.
For more details, 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
KNIGHT TRADING: Marc Henzel Files Securities Fraud Suit in New Jersey
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The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of New Jersey, on behalf
of purchasers of the securities of Knight Trading Group, Inc. (Nasdaq:
NITE) between February 29, 2000 and June 3, 2002, inclusive, against
the Company and Kenneth D. Pasternak.
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 a series of material misrepresentations to the
market between February 29, 2000 and June 3, 2002, thereby artificially
inflating the price of Company securities.
The complaint alleges that throughout the class period, defendants
issued statements regarding the Company's financial performance and
trading practices. As alleged in the complaint, these statements were
materially false and misleading because they failed to disclose and/or
misrepresented, among other things:
(1) that Company traders were engaging in an elaborate system of
trading-rule violations known as "front-running," in which
customer orders were delayed while defendants' traders made
purchases in the same stocks ordered by customers, thereby
benefiting themselves at the expense of the customer; and
(2) that the Company's front-running practices subjected the
Company to the heightened risk that it would be sanctioned by
the National Association of Securities Dealers (NASD).
On June 3, 2002, the last day of the class period, the Company
disclosed that its trading practices were being investigated by both
the Securities and Exchange Commission and the NASD. Following this
announcement, on June 4, 2002, when the market opened for trading,
shares of the Company plummeted 28% from the previous day's close.
For more details, 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
KNIGHT TRADING: Shalov Stone Commences Securities Fraud Suit in NJ
------------------------------------------------------------------
Shalov Stone & Bonner LLP initiated a securities class action in the
United States District Court for the District of New Jersey on behalf
of all purchasers of the common stock of Knight Trading Group, Inc.
(Nasdaq: NITE) from February 29, 2000 through June 3, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements. Specifically,
the complaint alleges that throughout the class period, defendants
issued misleading statements regarding the Company's financial
performance and trading practices.
As alleged in the complaint, these statements were materially false and
misleading because they failed to disclose and/or misrepresented, among
other things:
(1) that Knight traders were engaging in an elaborate system of
trading-rule violations known as "front-running," in which
customer orders were delayed while defendants' traders made
purchases in the same stocks ordered by customers, thereby
benefiting themselves at the expense of the customer; and
(2) that the Company's front-running practices subjected the
Company to the heightened risk that it would be sanctioned by
the National Association of Securities Dealers (NASD).
On June 3, 2002, the Company disclosed that its trading practices were
being investigated by both the Securities and Exchange Commission and
the NASD. Following this announcement, on June 4, 2002, when the
market opened for trading, Company shares plummeted 28% from the
previous day's close.
For more details, contact Lauren Fishman by Mail: 485 Seventh Avenue,
Suite 1000, New York, New York 10018 by Phone: 212-239-4340 by Fax:
212-239-4310 or by E-mail: lfishman@lawssb.com
LIGHT MANAGEMENT: Wolf Haldenstein Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the Southern District of
New York, on behalf of purchasers of the common stock of Light
Management Group, Inc. (OTC Bulletin Board: LMGR) between June 9, 1999
and November 20, 2001, inclusive, against the Company, certain of its
officers and directors, and two of its independent auditors, James E.
Slayton, CPA, and Feldman, Sherb & Co., PC.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
During the class period, financial results for fiscal 1999 were
restated twice, while the first, second, and third quarter financial
results in 2000 were each individually restated once. Furthermore, the
fiscal 2000 year-end results were restated as well.
The suit alleges that the independent auditor defendants falsely
represented that year-end results had been presented in compliance with
generally accepted accounting principles (GAAP) established from an
audit that was supposedly operated pursuant to generally accepted
auditing standards (GAAS). Moreover, it is further alleged that the
Company falsely stated that it had received commitments for outside
funding.
Additionally, the Company deceptively represented that backlog orders
for its outdoor media projection systems had increased by $20 million.
For more details, contact Fred Taylor Isquith, 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 LMG.
LIGHT MANAGEMENT: 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 purchasers of the common stock of Light Management
Group, Inc. (OTCBB: LMGR) between June 9, 1999 through November 20,
2001, inclusive. Named as defendants are the Company and:
(1) Barrington L. Simon,
(2) Dr. Donald J. Iwacha,
(3) Eve Sigfrid,
(4) Greg Amur,
(5) James E. Slayton, CPA, and
(6) Feldman, Sherb & Co., PC
The complaint 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 a series of material misrepresentations to the
market between June 9, 1999 through November 20, 2001, thereby
artificially inflating the market price of the Company's common stock.
Throughout the class period, defendants issued false and misleading
statements regarding the Company's quarterly and annual financial
performance and filed reports confirming such performance with the
United States Securities and Exchange Commission (SEC). Defendants
misrepresented the Company's financial results, and failed to disclose
weaknesses in its financial internal controls.
During the class period, financial results for fiscal 1999 were
restated twice. Financial results for the first, second, and third
quarter of 2000 were each separately restated once. In addition, year
end results for fiscal 2000 were also restated.
Independent Auditor Defendants, Slayton (auditor for fiscal 1999) and
Feldman Sherb (auditor for fiscal 2000) falsely represented that year
end results had been presented in accordance with generally accepted
accounting principles (GAAP) based upon an audit that was purportedly
conducted in compliance with generally accepted auditing standards
(GAAS). Defendants' misconduct included:
(i) booking sales that later had to be reversed;
(ii) failing to account for escalating costs and non-salary based
compensation;
(iii) misclassifying inventory as capital equipment;
(iv) failing to account for expenses incurred by the Company which
were paid by related entities in the period incurred;
(v) failing to book expenses due to the settlement of debt with
related parties; and
(vi) substantially understating interest expenses
Moreover, the Company falsely represented that it had received outside
funding critical to the growth of the business when, in truth, it knew
that the announced financing would not be forthcoming. The Company
also deceptively represented that backlog orders for its outdoor media
projection systems had increased by $20 million. In the two years
following this statement, the Company's reported revenues never
approached this level.
Defendants' wrongful course of conduct served to artificially inflate
the price of Company stock during the class period. While the price
was being artificially inflated by the Company's misrepresentations,
Omega Financial (a financial services firm 38%-owned by defendant
Simon) sold substantial amounts of Company stock.
By the last day of the class period, the price of Company stock, which
had traded for as much as $17.50 per share, had declined approximately
99% to $0.450 per share.
For more details, 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
MERRILL LYNCH: Marc Henzel Commences Securities Fraud 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 against Merrill Lynch & Co., Inc., and Internet stock analyst and
First Vice President of Merrill Lynch, Henry Blodget, on behalf of all
persons or entities who purchased or otherwise acquired the common
stock of Openwave Systems, Inc. (Nasdaq: OPWV) between October 16, 2000
and August 13, 2001, inclusive.
The complaint alleges that defendants violated the federal securities
laws by issuing analyst reports regarding Openwave that recommended the
purchase of Openwave common stock and which set price targets for
Openwave common stock, which were materially false and misleading and
lacked any reasonable factual basis.
The complaint further alleges that, when issuing their Openwave analyst
reports, the defendants failed to disclose significant, material
conflicts of interest, which resulted from their use of Mr. Blodget's
reputation and his ability to issue favorable analyst reports, to
obtain investment banking business for Merrill Lynch.
Furthermore, in issuing their Openwave analyst reports, in which they
recommended the purchase of Openwave stock, the defendants failed to
disclose material, non-public, adverse information, which they
possessed about Openwave.
Throughout the class period, the defendants maintained "ACCUMULATE/BUY"
or "BUY/BUY" recommendations on Openwave in order to obtain and support
lucrative financial deals for Merrill Lynch. As a result of
Defendants' false and misleading analyst reports, Openwave's common
stock traded at artificially inflated levels during the class period.
For more details, 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
MERRILL LYNCH: Shalov Stone Commences Securities Fraud Suit in S.D. NY
----------------------------------------------------------------------
Shalov Stone & Bonner LLP initiated a securities class action in the
United States District Court for the Southern District of New York on
behalf of purchasers of the common stock of Interliant, Inc.
(Nasdaq:INIT) between the period of Aug. 4, 1999, through Feb. 21,
2001, against Merrill Lynch & Co., Inc. and its internet analyst Henry
Blodget.
The suit alleges that defendants issued analyst reports with positive
ratings on Interliant which failed to disclose that this positive
research was issued in order to attract and maintain investment banking
business.
For more details, contact Lauren Fishman by Mail: 485 Seventh Avenue,
Suite 1000, New York, New York 10018 by Phone: 212-239-4340 by Fax:
212-239-4310 or by E-mail: lfishman@lawssb.com
MERRILL LYNCH: Marc Henzel Commences Securities Fraud 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 against Merrill Lynch & Co., Inc., and Internet stock analyst and
First Vice President of Merrill Lynch, Henry Blodget, on behalf of all
persons or entities who purchased or otherwise acquired the common
stock of Aether Systems, Inc. (Nasdaq: AETH) between November 15, 1999
and February 20, 2002 inclusive.
The complaint alleges that defendants violated the federal securities
laws by issuing analyst reports regarding Aether that recommended the
purchase of Aether common stock and which set price targets for Aether
common stock, which were materially false and misleading and lacked any
reasonable factual basis.
The complaint further alleges that, when issuing their Aether analyst
reports, the defendants failed to disclose significant, material
conflicts of interest, which resulted from their use of Mr. Blodget's
reputation and his ability to issue favorable analyst reports, to
obtain investment banking business for Merrill Lynch.
Furthermore, in issuing their Aether analyst reports, in which they
recommended the purchase of Aether stock, the Defendants failed to
disclose material, non-public, adverse information, which they
possessed about Aether.
Throughout the class period, the defendants maintained
"ACCUMULATE/BUY"or "BUY/BUY" recommendations on Aether in order to
obtain and support lucrative financial deal for Merrill Lynch. As a
result of defendants' false and misleading analyst reports, Aether's
common stock traded at artificially inflated levels during the class
period.
For more details, 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
MIRANT CORPORATION: Wolf Popper Commences Securities Suit in N.D. GA
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Wolf Popper LLP initiated a securities class action against Mirant
Corporation (NYSE:MIR) and certain of its senior officers and
directors, on behalf of all persons who purchased or otherwise acquired
the Company's common stock from January 19, 2001 through May 6, 2002,
inclusive.
The suit, filed in the United States District Court for the Northern
District of Georgia (Atlanta Division), charges the Company and four of
its officers and directors with violation of Sections 10(b) of the
Securities Exchange Act of 1934.
The suit alleges that a material portion of the revenue and earnings
defendants' caused the Company to report during the class period were
derived from the improper transactions and tactics the Company employed
in the California energy market. As a result, the revenue and earnings
associated with these transactions were allegedly reported in violation
of generally accepted accounting principles (GAAP).
The suit alleges that during the class period, defendants manipulated
the supply and price of electrical power, especially in California's
deregulated market. The Company's alleged participation in a scheme to
inflate the price of wholesale power in California resulted in the
Company overcharging California energy providers on contracts which
produced over $2 billion in revenue.
The Federal Energy Regulatory Commission and the Attorney General of
California are both investigating the propriety of the Company's sale
of electrical power in California.
Beginning in March of 2002, the Company announced a string of
investigations into its energy trading and energy sales practices. This
string of bad news was culminated on May 7, 2002, when an article in
The New York Times reported that documents uncovered in the
investigation of Enron Corp. revealed that the Company might have
engaged in fraudulent practices similar to those employed by Enron.
The financial market's reaction to this news caused the price of
Company stock to lose over 80% of its value, falling from its class
period high of $50.00 per share to close at $9.75 per share on May 7,
2002.
For more details, contact James A. Harrod or Abigail Kowaloff by Mail:
845 Third Avenue, New York, NY 10022-6689 by Phone: 212-759-4600 by
Fax: 212-486-2093 or 877-370-7704 by E-Mail: IRRep@wolfpopper.com or
visit the firm's Website: http://www.wolfpopper.com
MONTANA POWER: Cauley Geller Commences Securities Fraud Suit in Montana
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the District of Montana on
behalf of purchasers of the securities of Montana Power Company now
known as Touch America Holdings, Inc. (NYSE: TAA) during the period
between January 30, 2001 and November 14, 2001, inclusive.
The suit alleges that defendants the Company and Robert Gannon 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 January 30, 2001 and November
14, 2001, thereby artificially inflating the price of Company
securities.
Throughout the class period, as alleged in the suit, defendants issued
positive statements regarding the Company's successful restructuring
from an energy company into a stand-alone telecommunications company.
These statements were materially false and misleading because they
failed to disclose material adverse facts known to defendants or
recklessly disregarded by them, including:
(1) that the Company was having problems with the assets that it
acquired from Qwest Communications International - which had
become its principal assets in lieu of the power generation
assets which it had sold - and in its relationship with Qwest.
As a result of these problems, the Company was experiencing
declining revenues in its telecommunications business;
(2) that the Company's broadband division was experiencing
declining demand for its products and services; and
(3) as a result of the foregoing, the Company's purported
transformation to a standalone telecommunications company was
not meeting with success.
On November 14, 2001, the last day of the class period, the Company
issued a press release announcing its financial results for the third
quarter of 2001, the period ending September 30, 2001, and disclosed
that the Company's quarterly losses, "reflect the continued slowing of
the nation's economy and the difficult transition of Montana Power from
a diversified energy company to Touch America."
The press release further revealed that, as a result of its poor third
quarter results, the Company was not in compliance with certain
financial covenants under its Senior Secured Credit Facility. Finally,
the press release revealed that the Company was engaged in litigation
with Qwest concerning its purchase of certain assets from Qwest in June
2000, litigation underway since August 2001, but not meaningfully
revealed to investors.
Following this announcement, the price of Company stock declined from
$5.16 per share to $4.70 per share on heavy trading volume. In total,
investors saw the Company's common stock decline from a class period
high of $22.78.
For more details, 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
Website: http://www.classlawyer.com
MUTUAL RISK: Schiffrin & Barroway Lodges Securities Fraud Suit in CA
--------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of California on
behalf of all purchasers of the common stock of Mutual Risk Management
Ltd. (NYSE: MM) from February 16, 2000 through April 2, 2002,
inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition. Specifically, the complaint alleges
that during the class period, the Company and its most senior officers
and directors disseminated materially false financial statements for
each of the Company's interim quarters during that period and for the
years ended December 31, 2000 and 2001, which materially overstated its
cumulative revenues and its net income.
As a result of the materially false and misleading statements and
omissions described herein, Company stock was inflated to an all-time
high of $23.75 per share.
The Company also represented in each of its quarterly and annual
filings with the SEC that the financial statements included therein had
"been prepared in conformity with generally accepted accounting
principles" and "reflected all adjustments necessary for a fair
presentation of results for such periods."
In reality, each of the Company's financial statements violated GAAP by
understating reserves for potential claims. The financial results
included in Company SEC filings during the class period were thereby
rendered materially false and misleading.
Then, on April 2, 2002, the Company admitted that even its disastrous
Q4 2001 results (announced February 19, 2002) were not accurate,
putting the Company's shares into another "free fall," trading at just
pennies per share following the April 2, 2002 admission.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by e-mail:
info@sbclasslaw.com
OMNICOM GROUP: Marc Henzel Commences Securities Fraud 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 against Omnicom Group Inc. (NYSE: OMC) and certain of its senior
officers with violations of the federal securities laws, on behalf of
all persons who purchased the Company's common stock on the open market
during the period April 25, 2000 through June 11, 2002, inclusive.
The suit alleges that defendants materially misrepresented the
Company's financial results through improper accounting methods in
connection with certain acquisitions. More specifically, plaintiff
alleges that the Company fraudulently and misleadingly:
(1) reported growth in "organic" revenue that included revenue
generated by newly acquired companies; and
(2) failed to disclose the Company's future obligations relating
to its prior acquisitions.
The complaint further alleges that the Company transferred its minority
investments in various internet companies to a newly formed entity
(Seneca), enabling it to avoid writing down the value of its
investments in those companies, and that the Company failed to disclose
its contingent obligations to make additional investments in certain
partially acquired companies.
For more details, 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
OMNICOM GROUP: Shalov Stone Commences Securities Fraud Suit in S.D. NY
----------------------------------------------------------------------
Shalov Stone & Bonner LLP initiated 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 Omnicom Group, Inc.
(NYSE:OMC) between April 25, 2000 and June 11, 2002, inclusive.
According to the complaint, before and throughout the class period, the
Company reported that it was continuing to experience growth in its
revenues and earnings, despite the overall economic slowdown and the
worst decline in advertising revenue that the industry had ever
experienced. The Company's growth was attributed, for the most part,
to the numerous acquisitions made by the Company, which were accretive
to the Company's earnings.
However, on June 12, 2002, an article in The Wall Street Journal
highlighted the Company's acquisition accounting and raised questions
concerning its creation of an off-balance sheet entity in which it
transferred certain Internet investments.
With respect to the off-balance sheet entity, the article described the
Company's transfer of its Internet investments to Seneca, which had
been jointly created with Pegasus Capital LLP in May 2001. According to
the article, Seneca had been created as a vehicle for the Company to
avoid reporting a loss on its investments in Internet companies that
had become devalued.
In response to the revelations contained in The Wall Street Journal
article, the price of the Company's common stock dropped precipitously,
falling almost 20% to close at $62.28, on volume of more than 31
million shares traded.
For more details, contact Lauren Fishman by Mail: 485 Seventh Avenue,
Suite 1000, New York, New York 10018 by Phone: 212-239-4340 by Fax:
212-239-4310 or by E-mail: lfishman@lawssb.com
PEROT SYSTEMS: Marc Henzel Commences Securities Fraud Suit in N.D. TX
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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 Texas,
on behalf of purchasers of the securities of Perot Systems Corporation
(NYSE: PER) between February 2, 1999 and June 7, 2002, inclusive,
against the Company and certain of its officers.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
Specifically, the complaint alleges that defendants failed to disclose
critical facts concerning some of the Company's hazardous business
practices. Pursuant to attempting to generate new consulting business
and additional revenues, the Company made use of proprietary
information regarding the architecture of California's power grid,
noting weaknesses and loopholes that could be used to cause it to be
artificially congested. Allegedly this was enabling power traders to
reap supra-competitive profits to power trader Reliant.
The complaint further alleges that the Company faces considerable
potential legal liability regarding its improper disclosures of
proprietary information and the possibility that power traders utilized
the information to abuse such flaws for their own profit.
It is also alleged that the Company did not have adequate management
controls in place to avoid its personnel from using private information
acquired in the course of its consulting work as a selling point in
attempting to attain beneficial consulting business.
Company stock fell 19% on June 5, 2002 and dropped an additional 11.3%
to close at $12.90 on June 6, 2002, down from its class period high of
$85.75.
For more details, 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
RELIANT RESOURCES: Marc Henzel Commences Securities Suit in S.D. TX
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The Law Offices of Marc S. Henzel initiated a securities class action
in the US District Court for the Southern District of Texas, Houston
Division against Reliant Resources, Inc. (NYSE: RRI) alleging they
misled shareholders about its business and financial condition.
Plaintiff seeks damages for violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 (and/or the Securities Act of 1933)
on behalf of all investors who bought Company securities between May
14, 1999 and May 10, 2002.
The complaint alleges that the Texas-based Company issued statements
regarding its quarterly and annual financial performance and filed
reports confirming such performance with the United States Securities
and Exchange Commission (SEC).
The complaint alleges that these statements were materially false and
misleading because, among other things:
(1) the Company's stated and represented revenues in 1999 and 2000
were materially overstated because 10% of such revenues
represented purchases and sales with the same counter-party at
the same price, or so-called "round trip trades;" and
(2) the Company improperly accounted for certain transactions in
its conventional accrual accounts as cash flow hedges.
On May 10, 2002, the last day of the class period, the Company
announced that it was canceling a $500 million private placement debt
offering that had been priced on May 9, 2002, due in part, to having
engaged in "round trip" trades.
Following this announcement, the Company's common stock fell from a
high of $15.10 on May 9, 2002 to a low of $11.10 on May 10, 2002, or a
single-day decline of more than 25% on high trading volume and a
decline of more than 55% from the class period high.
For more details, 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
WORLDCOM INC.: Lovell & Stewart To File Amended Securities Fraud Suit
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Lovell & Stewart, LLP will file a new class action in the securities
litigation against WorldCom, Inc. (NasdaqNM: WCOM) to incorporate new
allegations that the Company boosted its cash flow and profits over a
five-quarter time period by wrongly booking billions of dollars in
expenses as capital expenditures.
The class period in the new suit will include all persons and entities
who purchased, converted, exchanged or otherwise acquired the Company's
common stock between April 30, 1999 and April 29, 2002, inclusive.
The lawsuit will assert claims under Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC
thereunder and the common law and seek to recover damages.
The original suit is pending in the US District Court for the Southern
District of New York, and alleges that the Company misrepresented its
earnings in its public filings with the SEC and elsewhere as a result
of failing to record write-downs of goodwill and other intangible
assets associated with the Company's acquisition of numerous
telecommunications companies at premium prices.
The complaint further alleges that the Company affirmatively misstated
the value of goodwill and other intangible assets associated with the
Company's acquisition of numerous telecommunications companies at
premium prices and carried such assets on the Company's balance sheet
at the cost of acquiring them long after it had become apparent that
the Company had overpaid to acquire such assets.
The original complaint further alleges that defendant Arthur Andersen,
LLP violated the federal securities laws by certifying the Company's
financial statements as incorporated in its Annual Report for the year
2000 filed with the SEC on March 30, 2001, and by allowing its
unqualified opinion to be incorporated by reference into the Company's
quarterly filings with the SEC after it was readily apparent that the
goodwill and other intangible assets on its balance sheet were being
carried at unrealistically and misleadingly high values.
On June 25, 2002, CNBC reported that the Company's CFO Scott Sullivan
has been ousted, and it now appears that the Company could be forced to
restate earnings before interest, taxation, depreciation and
amortization, or EBITDA, for the past five quarters. According to news
accounts, the Company may have overstated its earnings by as much as
$3.6 billion.
For more details, contact Christopher Lovell, Victor E. Stewart or
Christopher J. Gray by Phone: 212/608-1900 by E-mail:
classaction@lovellstewart.com or visit the firm's Website:
http://www.lovellstewart.com
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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
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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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