/raid1/www/Hosts/bankrupt/CAR_Public/001002.MBX               C L A S S   A C T I O N   R E P O R T E R

               Monday, October 2, 2000, Vol. 2, No. 191


BICO INC: 1996 Securities Suit Remains in Pre-trial Stage
BICO INC: Continues to Respond to PA Subpoenas Served in 1998
BUCS: Settles with Fans with Seat Reservation for Future Stadium
BUTLER: TX Appeeals Court Reverses Class Status for Power Outages
CREDIT CARDS: Providian Financial Given Bad Rating after Investigation

ELCOR CORP: Discloses 1995-96 Gibraltar Tort Litigation against Chromium
ELCOR CORP: More Homeowners Sue over Asphalt; Co. Contests Certification
FAULTY FURNACE: Agency Issues Warning on Consolidated Industries Product
FORD MOTOR: Lawsuit Alleges of Hiding the Explorer's Dangers
GENERAL MOTORS: Faces Sidesaddle Gas Tanks Problem Decades after Use

INSURANCE MANAGEMENT: Cauley & Geller Files Securities Suit in Florida
INSURANCE MANAGEMENT: Milberg Weiss Files Securities Suit in Florida
LERNOUT & HAUSPIE: Subject to SEC Probe, The Pomerantz Firm Says
MCKESSON HBOC: Former Executives at Drug Wholesaler Charged with Fraud
ORIENTAL RUG: Cir Court Reinstates Antitrust Claim in Domestic Market

PAREXEL INTERNATIONAL: 17 Suits over Drug Brought By Individuals So Far
PAREXEL INTERNATIONAL: Arbitrageurs Claim Merger Termination Damages
PIPER AIRCRAFT: $75M Lawsuit Says Engine Problem Caused 4 Crashes
TOBACCO LITIGATION: Judge Carves Health Cost Chunk out of Suit

* New Regulation FD Warrants Reexamination of Disclosure Practices


BICO INC: 1996 Securities Suit Remains in Pre-trial Stage
On  April  30, 1996, a class action lawsuit was filed  against
the  Company,  Diasense,  Inc., and  individual  officers  and
directors.   The  suit,  captioned  Walsingham  v.  Biocontrol
Technology,etal., has been certified as a class action, and is
pending in the U.S. District Court for the Western District of
Pennsylvania.   The  suit  alleges misleading  disclosures  in
connection  with  the  Noninvasive Glucose  Sensor  and  other
related  activities.  By mutual agreement of the parties,  the
suit  remains in the pre-trial pleading stage, and the Company
is  unable  to  determine the outcome or its impact  upon  the
Company at this time.

BICO INC: Continues to Respond to PA Subpoenas Served in 1998
During  April 1998, the Company and its affiliates were served
with  subpoenas  by the U.S. Attorneys' office  for  the  U.S.
District Court for the Western District of Pennsylvania.   The
subpoenas   requested   certain   corporate,   financial   and
scientific  documents  and the Company  continues  to  provide
documents in response to such requests.

BUCS: Settles with Fans with Seat Reservation for Future Stadium
The settlement allows the fans who sued first to pick better seats at the
stadium. Even though a few Tampa Bay Buccaneer fans wanted to keep
fighting, a Hillsborough circuit judge approved an end to one of the most
unusual legal battles between a National Football League team and its

Judge Sam Pendino approved a settlement between the Bucs and unhappy
season-ticket holders who paid in 1995 to reserve a seat in the yet-to-be
built Raymond James Stadium. "It is time for the community to put this
issue behind us - and play ball," said attorney Jonathan Alpert, who
represented the unhappy fans.

Fans who ended up with worse seats in the new stadium claimed the team
didn't keep its promise to assign seats based on a season-ticket holder's
seating history. Six fans hired Alpert in 1999 to sue the Bucs.

The settlement approved allows the fans who sued first to pick from among
120 seats, about one-third of them in choice sections near the 50-yard
line. It also gave them a $ 5,000 credit for the purchase of tickets and
parking, and the team also agreed to pay $ 180,000 in attorneys fees and
$ 30,000 for legal costs.

The remainder of the 120 seats were made available to 17,000 longtime
season-ticket holders through a random selection process supervised by a
court-appointed hearing master. Those fans had to be willing to give up
their current seats and were only eligible for available seats in the
same price category. Season-ticket holders were mailed a letter from the
Bucs detailing the arrangement.

While Alpert and Bucs attorney Arnie Levine agreed on the deal in June,
the court still had to approve it.

Before doing that, the judge wanted to give the eligible season-ticket
holders a chance to consider the deal.

Three of them spoke against the settlement in court; about 250 others
decided to get out of the class-action lawsuit, leaving them with the
right to file a separate lawsuit over the issue.

Myles Friedland, an aerospace engineer with season tickets, asked Pendino
to force the Bucs to reassign seats for all the affected fans.

"Why not do the right thing?" Friedland said. He said more fans did not
oppose the settlement because they feared losing their seats altogether.

"They used this document to intimidate season-ticket holders," Friedland
said about the settlement terms mailed to fans.

Friedland and lawyer Lisa Cullaro, who represents her father, told
Pendino they planned to appeal his decision. A third fan, Brian Schall,
said he will speak to an attorney about his options.

As it turned out, only four fans entered the lottery for new seats,
giving those four fans excellent odds of getting prime seating. (St.
Petersburg Times, September 29, 2000)

BUTLER: TX Appeeals Court Reverses Class Status for Power Outages
A Texas appeals court reversed a trial court order that had granted class
action status to multiple plaintiffs suing the local electric utility
over power outages. The appeals court ruled that common issues did not
predominate over individual interests. Entergy Gulf States, Inc. v.
Butler, No. 06-99-0082-CV, Aug. 1, 2000 (Tex.App., Texarkana). (Public
Utilities Fortnightly, September 15, 2000)

CREDIT CARDS: Providian Financial Given Bad Rating after Investigation
OCC, et al. v. Providian Financial San Francisco based Providian
Financial Corp., the sixth-largest credit card issuer, has been given a
bad rating. After a 14-month investigation by the San Francisco district
attorney's office in conjunction with the Office of the Comptroller of
the Currency, Providian has agreed to settle charges of deceptive
business practices by forking over $300 million to its customers. The
company, which offers cards to many customers with a weak credit history,
allegedly changed rates without notifying consumers and delayed sending
bills in order to collect late fees. The company has also agreed to pay
$5.5 million in penalties to the city and county of San Francisco. for
the Office of the Comptroller of the currency (washington, d. C.)
in-house: Senior attorney enforcement and compliance Kevin Lee and senior
attorney western district Lewis Segall. (Segall is based in San
Francisco.) (The American Lawyer, October 2000)

ELCOR CORP: Discloses 1995-96 Gibraltar Tort Litigation against Chromium
In 1995 and 1996, Chromium Corporation, a unit of Elcor engaged in the
remanufacture of diesel engine cylinder liners, including hard chrome
plating of cylinder bores and tin plating of pistons, was sued in four
separate tort lawsuits brought on behalf of numerous plaintiffs who
alleged unspecified personal injuries and property damages associated
with the former operation of a licensed hazardous waste treatment,
storage and disposal facility in Smith County, Texas known as the
Gibraltar facility. Chromium was sued as a generator of waste sent to the
Gibraltar facility, along with numerous other generator defendants and
current and former owners and operators of the facility.

The plaintiffs non-suited or dismissed the generator defendants,
including Chromium, from two of the cases. In June 1999, Chromium reached
a settlement with plaintiffs in the remaining two cases, including Adams
v. American Ecology Environmental Services Corporation, a case pending in
Tarrant County (Texas) District Court. In December 1999, however, a new
group of approximately 30 plaintiffs sought to intervene in the Adams
suit and sued the generator defendants and others in an action, Cuba v.
American Ecology Environmental Services Corporation filed in Rusk County
(Texas) District Court. Since judgment has already been entered in Adams,
no intervention occurred. The Cuba action in Rusk County remains pending.

In June 2000, Chromium reached a settlement in an action it had filed
against certain of its insurers seeking coverage in the Gibraltar
litigation. The settlement requires the insurers to provide an ongoing
defense of the Gibraltar litigation and to pay the majority of defense
costs incurred in the Cuba suit. Cumulatively, the resolution of the
settled Gibraltar litigation and related insurance coverage litigation
did not, and the Cuba litigation is not expected to, have a material
adverse effect on Registrant's results of operations, financial position
or liquidity.

ELCOR CORP: More Homeowners Sue over Asphalt; Co. Contests Certification
As previously reported in the CAR, in February 2000, Wedgewood Knolls
Condominium Association filed a purported class action in the United
States District Court in Newark, New Jersey, which as amended names Elk
Corporation of Texas and Elk Corporation of Alabama. The purported
nationwide class would include purchasers or current owners of buildings
with certain Elk asphalt shingles installed between January 1, 1980 and
present. The suit alleges, among other things, that the shingles were
uniformly defective. It seeks reformation of the limited warranty
applicable to the shingles, and unspecified damages for breach of implied
and written warranties and alleged unfair or deceptive trade practices on
behalf of the plaintiff and the purported class.


In June 2000, an individual homeowner filed a purported class action,
Lastih v. Elk Corporation of Alabama, in the Judicial District of
Hartford, Connecticut. In August 2000, Elk removed that case to the
United States District Court in New Haven, Connecticut. The Lastih suit
involves similar class allegations and claims to those asserted in the
Wedgewood Knolls suit described above.

Elk has denied the claims asserted in the Wedgewood Knolls and Lastih
actions, and is vigorously defending these suits. Elk has denied that
class certification is appropriate and intends to contest any attempts to
certify such a class. Elcor cannot predict whether these actions, which
are both in early stages, will have a material adverse effect on its
results of operations, financial position or liquidity.

FAULTY FURNACE: Agency Issues Warning on Consolidated Industries Product
After knowing about the problem since the mid-1990s, the Consumer Product
Safety Commission, the independent federal agency charged with warning
consumers about defective products, has issued a warning about faulty
attic furnaces made by Consolidated Industries.

The warning was released late last Wednesday September 27 -- the same day
The Times broke the story that hundreds of thousands of unsuspecting
homeowners statewide may have the furnaces, which fire inspectors say
caused scores of fires in California over the last decade. The furnaces
were installed from 1984 to 1992 under at least 30 brand names.

The CPSC said it didn't issue the warning sooner because federal law
prohibits it from issuing warnings while it's conducting recall
negotiations. Federal investigators hoped to recall faulty Consolidated
furnaces, but were unable to do so when the Indiana-based company went
out of business.

The Consolidated furnaces fail because of alterations that Consolidated
made to comply with regional air quality standards, federal safety
experts found.

After it broke the story, The Times received a call from a Laguna Hills
family who said contractors told them deadly carbon monoxide would have
leaked into their home if they hadn't had their Consolidated furnace

Other consumers called for information on a class-action lawsuit filed by
California homeowners against Consolidated in 1994. Plaintiffs' attorneys
are scheduled to ask a Santa Clara Superior Court to set a trial date for
the case next month.

Residents in housing tracts from Glendora to Newport Beach called
contractors and safety experts and asked for help inspecting their
furnaces in response to the story. Contractors from Walnut to the San
Fernando Valley to Orange said they fielded numerous calls from anxious
furnace owners.

John Kopp, a contractor at Ocean Air Conditioning & Heating Co. in Laguna
Niguel, said he took a half-dozen Consolidated-related calls and talked
to others in the business whose "phones were ringing off the hook."

The CPSC warning says the furnaces "present a substantial risk of fire."
The warning adds that there are about 190,000 Consolidated units in
California, 60,000 fewer than the 250,000 units that CPSC investigators
reported to The Times.

Southern California fire investigators disputed the number of fires
listed in the warning, which said the CPSC had about 30 reports of fire
and damage to homes in the state.

"They've done no investigation as far as going out and finding fires,"
said Mike Freige, a senior fire inspector in Torrance. "I've found 18 on
my own and I know there are more out there." To date, no one has tried to
catalog the total number of fires in the state caused by the furnaces.

The warning suggests that residents who have Consolidated furnaces call a
licensed heating contractor, who must take apart the furnace and inspect
the burner and heat exchanger for damage.

Safety experts questioned a suggestion in the warning that the
Consolidated furnaces can be repaired. (Los Angeles Times, September 29,

FORD MOTOR: Lawsuit Alleges of Hiding the Explorer's Dangers
The dangers of Ford's Explorer, prone to rollover since it was first
designed and made worse when equipped with under-inflated Firestone tires
that tried to hide the defect, were hidden from consumers, who were
deceived into buying and leasing them and now face significantly reduced
values for the vehicles, according to a first-ever lawsuit.

When it was developed in the late 1980s, Ford tested the Explorer's
stability to determine whether it would face the rollover problem that
plagued its predecessor model, the Bronco II. Ford tests showed the
Explorer was especially prone to rollover when its Firestone ATX tires
were inflated according to Firestone's recommended pressure of 35 psi.

Despite the safety recommendations of its own engineers, Ford decided not
to implement fundamental design changes to correct the rollover defect in
order to speed the Explorer to market. Instead, Ford, with at least the
tacit approval of Bridgestone/Firestone, decreased the air pressure from
the tires to increase stability. Under-inflating the tires, though,
increased the risk of catastrophic tread separation - and Ford knew it,
according to the suit.

"By lowering the tire pressure on the Explorer, Ford and
Bridgestone/Firestone tried to trick the public into believing the
Explorer was safe. But it wasn't, and the companies knew the dangers from
their own testing as well as from basic industry knowledge," said
Theodore J. Leopold, of Ricci, Hubbard, Leopold, Frankel & Farmer, P.A.,
who is representing the plaintiffs.

The lawsuit was filed in U.S. District Court in Orlando by Stephen
Neuwirth of Boies, Schiller & Flexner, LLP, and Edward M. Ricci and
Leopold, of Ricci, Hubbard, Leopold, Frankel & Farmer, P.A. It is the
first action against Ford involving the dangers of the Explorer with its
Bridgestone/Firestone tires. Bridgestone/Firestone, Inc. and Bridgestone
Corp. are co-defendants.

The plaintiffs are Diana Grant, of Palm Springs, FL, owner of a Ford
Explorer, and Jane Lill, of Palm Beach Gardens, FL, a previous owner of
an Explorer. The lawsuit seeks class-action status.

The lawsuit alleges that Ford and Bridgestone/Firestone violated the
federal Racketeer Influenced and Corrupt Organizations Act (RICO), and
committed fraud and other wrongdoing. It seeks triple damages resulting
from the decreased value of owned or leased Explorers, and for the excess
costs consumers paid to own or lease the vehicles.

As a result of Ford and Bridgestone/Firestone's fraudulent and deceptive
scheme, millions of Americans now own or lease Explorers that are sinking
in value. In its most recent pricing schedule, the Automotive Lease
Guide, the authority for valuing new vehicle leases, downgraded the
after-lease value of the Explorer by $1,850, about $600 of which is
attributed directly to the safety risks that were fully known to the
defendants prior to the Explorer's introduction.

"Not only did Ford and Bridgestone/Firestone conceal the tire separation
defect, but at the same time, they launched elaborate advertising
campaigns designed to deceive the public into thinking that the Explorer
was safe," said Leopold.

According to recent reports, there have been more than 400 injuries and
about 103 deaths in the United States alone - including at least 20
fatalities in Florida - as a result of the Explorer/ATX defect. Ford and
Bridgestone/Firestone failed to warn U.S. consumers even when Ford
recalled Explorers in 16 foreign countries to replace their ATX tires.
Although the automaker has refused to concede the clear consequences of
its improper tire pressure directives, it only recently raised its
recommended tire pressure from 26 psi to 30 psi.

"Consumers are caught in a Catch-22 situation: raise the tire pressure
and face the dangers of a rollover, or continue using the lower pressure
and face the consequences of tread separation. It's an unconscionable
choice," said Leopold.

"To make matters worse, we now know that consumers vastly overpaid for
the opportunity to make this deadly decision and are left with a vehicle
that has severely diminished in value."

For more information, contact Theodore J. Leopold, at 561/515-2608. Case
No. 6:00CV-1281-CV-19-A.

Contact: Winslow Rubin Communications, Boca Raton, Fla. Andrew Rubin,

GENERAL MOTORS: Faces Sidesaddle Gas Tanks Problem Decades after
Many of the trucks were junked years ago. But the lawsuit over
"sidesaddle" gas tanks on General Motors trucks made between 1973 and
1991 is still alive and wriggling. Oral arguments were scheduled for
September 28 in state appeal court on the  test twitch in a lawsuit first
filed in 1993 and a settlement reached in 1996.

It called for GM to send a coupon worth $1,000 toward the purchase of a
new GM car or truck to owners of C- or K-series trucks built from 1973-87
or a R- or V-series truck built from 1987-91.

The 6 million plaintiffs claimed that the tanks are prone to blow up in
collisions, driving down the trucks' value. The owners did not claim to
have suffered damages from explosions or fires. General Motors did not
admit any liability in the settlement.

GM critics said the certificates were essentially worthless, since most
probably would go unredeemed. Federal courts in Texas and Philadelphia
had rejected similar proposals.

Some plaintiffs went to court against the settlement.

Then Louisiana State District Judge Jack Marionneaux certified a Houston
company, The Certificate Redemption Group, as an approved buyer willing
to pay $ 100 per certificate. CRG and other middlemen planned to buy the
coupons from truck owners and sell them at a profit to banks, leasing
companies and GM dealers, who could, in turn, offer $500 discounts to
their customers. "The objectors are in complete support of class counsel
in connection with this issue," plaintiffs attorney Jack Crow said.

GM appealed. "It's sort of analogous to where you where you agree to pay
$100 as a final judgment, then the other party comes in and says, "Gee,
it'd sure be nice if I had $200 instead of $100,"' GM attorney Lee
Schutzman said. (The Associated Press State & Local Wire, September 27,

INSURANCE MANAGEMENT: Cauley & Geller Files Securities Suit in Florida
The Law Firm of Cauley & Geller, LLP announced on September 29 that it
has filed a class action in the United States District Court for the
Middle District of Florida on behalf of all individuals and institutional
investors that purchased the securities of Insurance Management Solutions
Group, Inc. (NASDAQ: INMG) pursuant or traceable to the Company's
February 11, 1999 initial public offering ("IPO").

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by providing a materially
false and misleading Registration Statement and Prospectus. Specifically,
the complaint alleges that the Prospectus was materially false and
misleading because it failed to disclose: (i) the flood mapping business
was not compatible with INMG's outsourcing services and synergies could
not possibly be realized causing expected future growth to be well-below
INMG's estimates; (ii) as a result of the incompatible nature of the two
lines of business, few if any cross-over selling opportunities existed,
further impacting future growth expectations; (iii) INMG's problems
integrating these two lines of business prevented INMG from consolidating
Geotrac of America, Inc. ("Geotrac") into its operations and accessing
Geotrac's customer base to generate additional revenue; and (iv) as a
result of the foregoing, the defendants had no reasonable basis to
conclude that INMG expected to experience significant growth in its
business and revenues.

Contact: CAULEY & GELLER, LLP Sue Null, Jackie Addison or Sharon Jackson
Toll Free: 1-888-551-9944 E-mail: Cauleypa@aol.com

INSURANCE MANAGEMENT: Milberg Weiss Files Securities Suit in Florida
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on September 28, 2000, on behalf of all
persons who purchased the securities of Insurance Management Solutions
Group, Inc. (NASDAQ: INMG) pursuant or traceable to the Company's
February 11, 1999 initial public offering ("IPO"). A copy of the
complaint filed in this action is available from the Court, or can be
viewed on Milberg Weiss' website at: http://www.milberg.com/inmg/

The action, numbered 8:00-CV-2013-T-26-F, is pending in the United States
District Court for the Middle District of Florida, located at 223 Sam M.
Gibbons Courthouse, 801 N. Florida Avenue, Tampa, FL 33602-3800 against
defendants IMSG, Geotrac of America, Inc. ("Geotrac"), Bankers Insurance
Group, Inc., Venture Capital Corporation, David K. Meehan, Jeffrey S.
Bragg, Daniel J. White, Robert M. Menke, Robert G. Menke, John A. Grant,
Jr., William D. Hussey, E. Ray Solomon, Alejandro M. Sanchez,
individually, and Raymond James & Associates, Inc., and Keefe, Bruyette &
Woods, Inc., individually, and as representatives of the underwriter
class. The Honorable Richard A. Lazzara is the Judge presiding over the

The complaint alleges that defendants violated Sections 11, 12(a)(2) and
15 of the Securities Act of 1933 by issuing a materially false and
misleading Registration Statement and Prospectus. As alleged in the
Complaint, the Prospectus represented that INMG was successfully
assimilating its two primary lines of business, flood mapping and
insurance outsourcing services, and that it was realizing synergies
between these purportedly overlapping but different lines of business,
leaving INMG well-positioned to execute its growth strategy.
Specifically, the complaint alleges that the Prospectus was materially
false and misleading because it failed to disclose: (i) the flood mapping
business was not compatible with INMG's outsourcing services and
synergies could not possibly be realized causing expected future growth
to be well-below INMG's estimates; (ii) as a result of the incompatible
nature of the two lines of business, few if any cross-over selling
opportunities existed, further impacting future growth expectations;
(iii) INMG's problems integrating these two lines of business prevented
INMG from consolidating Geotrac into its operations and accessing
Geotrac's customer base to generate additional revenue; and (iv) as a
result of the foregoing, the defendants had no reasonable basis to
conclude that INMG expected to experience significant growth in its
business and revenues.

Contact: Kenneth J. Vianale or Maya S. Saxena, 561/361-5000 or Milberg
Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or Samuel H. Rudman,
800/320-5081 Email: inmgcase@milbergNY.com Website:

LERNOUT & HAUSPIE: Subject to SEC Probe, The Pomerantz Firm Says
The financial statements of Lernout & Hauspie Speech Products N.V.
(Nasdaq: LHSP) are being probed by the Securities and Exchange Commission
according to a press release issued by the Company. These same financial
statements are subject to a private class action securities litigation
filed by Pomerantz Haudek Block Grossman & Gross LLP
(http://www.pomerantzlaw.com)against Lernout & Hauspie and the Company's
President/Chief Executive Officer, Gaston Bastiaens. The case was filed
in the United States District Court for the Eastern District of
Pennsylvania on behalf of all those who purchased the common stock of
Lernout & Hauspie during the period between May 18, 1999 and September
21, 2000, inclusive (the "Class Period").

The Complaint charges that Lernout & Hauspie violated Sections 10(b) and
20 of the Securities Exchange Act of 1934 by allegedly engaging in
fraudulent accounting practices, including booking a substantial amount
of sales made to related parties located in Singapore and Korea, in the
aftermath of Lernout & Hauspie's acquisition in September 1999 of Bumil
Information & Communications Ltd. ("Bumil"). It is further alleged that
revenues generated from those sales were materially enhancing the
company's performance. As a result, Lernout & Hauspie's reported revenues
and earnings were materially inflated, resulting in the artificial
inflation of the price of the Company's common stock during the Class

On August 7, 2000, a Wall Street Journal ("WSJ") article questioned a
number of Lernout & Hauspie's purported sales. In response to the WSJ
article, the price of Lernout & Hauspie's common stock fell dramatically.
Thereafter on September 21, 2000, the Company announced that the SEC has
launched a formal investigation of the Company's accounting practices and
financial statements, and that Lernout & Hauspie's Audit Committee had
retained independent counsel and was conducting its own investigation. As
a result of these disclosures, the price of Lernout & Hauspie's common
stock declined further to less than $14 per share.

Contact: Andrew G. Tolan, Esq. of Pomerantz Haudek Block Grossman & Gross
LLP, 888-476-6529 (888-4-POMLAW) or agtolan@pomlaw.com.

MCKESSON HBOC: Former Executives at Drug Wholesaler Charged with Fraud
Reacting to one of the biggest stock market scandals in recent history,
federal prosecutors in San Francisco last Thursday September 28 unveiled
criminal securities fraud charges against two former executives blamed
for billions of dollars in losses at McKesson HBOC, the nation's largest
drug wholesaler.

In what may be just the first legal development in a massive probe into
McKesson's stock collapse last year, a 31-page indictment unsealed in San
Francisco federal court alleges that two key figures orchestrated an
elaborate scheme to defraud investors and pocket millions of dollars in
stock profits for themselves.

The indictment names Jay Gilbertson and Albert Bergonzi, the co-chief
operating officers of Georgia-based HBO & Co., a leading software firm in
the health-care industry that was acquired by San Francisco-based
McKesson in January 1999. Federal prosecutors and securities regulators
now say McKesson inherited a company that was riddled with accounting
fraud and run by corporate managers who illegally inflated its financial
outlook by tens of millions of dollars each quarter.

The Securities and Exchange Commission also filed a civil complaint last
Thursday September 27, naming Gilbertson, Bergonzi and Dominick DeRosa, a
former vice president of sales for the software company, who is now
cooperating with federal investigators.

Helane Morrison, the SEC's regional chief in San Francisco, called the
case one "of the largest financial reporting frauds ever," stressing that
the investigation into McKesson's accounting troubles is continuing. U.S.
Attorney Robert Mueller III said the case is "a poster child for the
devastating effect of financial fraud by corporate management."

But attorneys for Gilbertson and Bergonzi said they will aggressively
fight the charges. The two men, both Georgia residents, are expected to
make their first court appearance within the next two weeks.

"I would say some have been quick to pin all the misfortunes and problems
at McKesson on Bergonzi and this alleged conduct," said Joseph
Russoniello, Bergonzi's lawyer and Northern California's U.S. attorney
during the 1980s. "I think that's unfair."

Added Robert Plotkin, Gilbertson's attorney: "Mr. Gilbertson denies the
charges and intends to defend himself."

The criminal and SEC charges arose from McKesson's restatement of tens of
millions of dollars in earnings and its disclosure in April 1999 that the
company was conducting an internal audit of accounting irregularities in
HBOC. When McKesson revealed the problems, it created one of the most
devastating one-day setbacks ever on Wall Street -- the company's stock
plunged from $ 65 a share to $ 34 a share, losing $ 9 billion in market
value. The stock has not recovered.

Lawyers familiar with the case describe it as an example of how companies
like McKesson that branch out through mergers and acquisitions can find
themselves vulnerable to the accounting practices of past management.
McKesson's troubles have been likened to a New York case against the
Cendant Corp., which last year was forced to pay more than $ 2 billion to
investors, the largest securities fraud settlement in history.

The indictment alleges that Gilbertson and Bergonzi cooked HBOC's books
between December 1997 and April 1999. The former executives are accused
of entering into repeated, multi-million dollar side agreements on
software contracts that enabled them to consistently record sales figures
illegally; the indictment also alleges they destroyed documents to cover
their trail and misled the company's auditors.

In one quarter alone, HBOC inflated its revenues by $ 88 million. By the
time McKesson completed the merger, Gilbertson made about $ 7.2 million
in stock profits and Bergonzi earned $ 4.6 million, allegedly while
knowing they were misleading investors about the health of the company.

Though McKesson was not the target of the federal law enforcement
actions, it has been slapped with dozens of class action lawsuits by
investors. Those lawsuits named Gilbertson and Bergonzi, but also
McKesson HBOC, its top management at the time of the January 1999 merger
and Arthur Anderson & Co., HBOC's auditors.

The suits allege that McKesson was responsible for failing to detect the
scope of the fraud at HBO. SEC officials declined to say whether
McKesson's former management may face any legal action, but said the
probe is continuing. Current McKesson management is cooperating with the
SEC and federal prosecutors.

"For us, this is old history," said Larry Kurtz, spokesman for McKesson,
which had been openly questioned for acquiring a software business even
before the alleged fraud was revealed. "We've been on an 18-month program
to rebuild that business." (San Jose Mercury News, September 29, 2000)

ORIENTAL RUG: Cir Court Reinstates Antitrust Claim in Domestic Market
59-8-4832 Carpet Group Intl., et al. v. Oriental Rug Importers Assn.,
Inc., et al., Third Cir. (Rosenn, U.S.C.J.) (23 pp.)

This is an action under the Sherman Act alleging a conspiracy to restrain
trade and monopolize the thriving U.S. market for oriental rugs.

The District Court dismissed the case, determining that plaintiffs had
failed to establish jurisdiction under the Foreign Trade Antitrust
Improvements Act because they had not proved that defendants' actions
involved or otherwise substantially affected U.S. commerce.

The circuit panel concludes that the Foreign Trade Antitrust Improvements
Act is inapplicable to this case and that the District Court erred in
dismissing it. Further, it finds that the plaintiffs have offered
sufficient evidence to demonstrate that the activities of the
defendants/wholesale importers were intended to, and adversely did,
impact on domestic commerce by engaging in a course of anti-competitive
conduct to ensure that only they, the importers, could bring oriental
rugs manufactured abroad into the United States for distribution. The
court further holds that subject-matter jurisdiction exists under the
Sherman Act, and that the plaintiffs have antitrust standing. (Filed
Sept. 8, 2000.) (New Jersey Law Journal, September 25, 2000)

PAREXEL INTERNATIONAL: 17 Suits over Drug Brought By Individuals So Far
The Company has been named as one of many defendants in approximately
seventeen (17) lawsuits currently pending before the state trial courts
in New Jersey and Pennsylvania. This litigation relates to a drug for
which the Company provided clinical research services. These actions were
brought by individual plaintiffs and not as class actions. Generally, the
claims against the Company in these actions include negligence, breach of
express and implied warranty, strict liability, fraud, civil conspiracy,
and negligent and intentional infliction of emotional distress. The
Company has provided notice of these matters to its insurance carriers.
Indemnification has been secured as to four (4) of the pending lawsuits
from one of the companies for which the Company provided clinical
research services. The Company has submitted requests for indemnification
as to the remaining pending lawsuits pursuant to the Company's contracts
with other companies for which the Company provided clinical research
services for the subject drug.

PAREXEL INTERNATIONAL: Arbitrageurs Claim Merger Termination Damages
The Company and four of its directors have been named in a lawsuit filed
on or about June 8, 2000 by two arbitrageurs, Elliott Associates, L.P.
and Westgate International L.P. The complaint, filed in the United States
District Court for the Southern District of New York, alleges violations
of Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 10b-5, Section 20(a) of the Exchange Act and state law
claims for fraud and negligent misrepresentation. The arbitrageurs allege
that they executed both purchases and short sales of securities in
reliance on statements made by the Company regarding a proposed merger
with Covance, Inc. announced in April 1999. The arbitrageurs further
allege that they were damaged by the termination of the merger agreement
which was announced in June 1999. The Plaintiffs have provided notice to
the Company's counsel that they intend to withdraw their negligent
misrepresentation claim. The Company and the Directors have filed a
motion with the court to dismiss the complaint. The Company has provided
notice of this matter to its insurance carrier.

PIPER AIRCRAFT: $75M Lawsuit Says Engine Problem Caused 4 Crashes
The New Piper Aircraft Inc. of Vero Beach faces a $ 75 million lawsuit
over a faulty engine part in the Malibu Mirage, a sleek six-seat airplane
billed by the company as "perfection." The suit, filed in U.S. District
Court in Fort Pierce, targets Piper and the plane's engine manufacturer,
Textron Lycoming of Williamsport, Pa.

The plaintiff, Dallas businessman William Montgomery, contends Piper and
Textron knew about the engine problem for several years and did nothing
about it, jeopardizing people's safety and costing owners hundreds of
thousands of dollars. Though no one was killed, four plane crashes in the
past four years were caused by the problem - a lead alloy in a rod
bearing that melts when the engine heats up, said one of Montgomery's
attorneys, Charles Ames of Dallas.

Textron last month acknowledged a problem with the engine's rod bearing
and offered to replace it starting in October, but Ames said Mirage
owners deserve at least $ 75 million for maintenance expenses, lost
flying time, alternative travel costs and lower resale values.

Mirage owners are supposed to be able to fly 2,000 hours before
overhauling the engine but instead are averaging about 600 to 700 hours,
said Ames, part of a team that includes Fred Misko of Dallas and Michael
Pucillo of West Palm Beach.

The attorneys are seeking class action status for the suit.

An engine replacement costs about $ 95,000, plus six weeks of down time,
Ames said. "When you buy something that you think will go for 2,000 hours
and it only goes 600 or 700 hours, you've lost two-thirds of what you
bought," Ames said from his Dallas office. "The owner is taking a huge
financial loss." The single-engine Malibu Mirage, which lists for $
869,800, is popular with business travelers because of its ability to fly
at an altitude of 25,000 feet - uncommonly high for a single-engine
airplane. Piper's Web site bills it as "Perfection: It's no illusion,
it's a mirage."

Since production began in 1987, Piper has built and sold about 465 Malibu
Mirages, the suit states. About 1,200 past and present owners could be
eligible for compensation if damages are awarded, Ames said.

Piper President and Chief Executive Chuck Suma was unavailable for
comment. The company said in a press release: "Textron Lycoming, with New
Piper's participation, has addressed and is currently resolving all known
component issues. New Piper is committed to manufacturing safe and
airworthy products and maintains that the Malibu Mirage is a safe and
reliable aircraft."

Piper, a privately held company with 1,400 employees, had $ 146 million
in revenue last year and expects to have $ 200 million this year.

A survey of past and present Mirage owners, accounting for 111 planes,
found that there were 60 in-flight engine failures, 66 premature engine
overhauls, 46 instances of metal in the oil and 32 replaced engines, the
suit claims.

Montgomery filed suit after participating in an initial survey last
spring by Enhanced Flight Group of Lexington, Ky., which uncovered
similar complaints.

Pilot Jonathan Sisk ran into problems with his Mirage and started
Enhanced Flight Group this year on the theory that he could make better
engine parts.

"Responses to our survey came back a lot more negative than we
anticipated, and it put us in a funny situation," said Sisk, who also
owns an electronics manufacturing business in Lexington. "What we
initially tried to find out is whether there's enough of a problem to
warrant a business venture. "Now the issue is: Do we want to be involved
in any way in this engine?" (The Palm Beach Post, September 26, 2000)

TOBACCO LITIGATION: Judge Carves Health Cost Chunk out of Suit
A federal judge has dismissed a large part of the Justice Department's
civil lawsuit against the tobacco industry, but cleared the way for the
government to move forward with its claim that the industry violated
federal racketeering laws by conspiring to mislead the public about the
dangers of smoking.

U.S. District Judge Gladys Kessler ruled that the Justice Department
could not seek to recover billions of dollars in smoking-related health
care costs. But she said it could continue efforts to seize billions of
dollars in tobacco profits under the racketeering statute. "In sum, while
the government's theories of liability have been limited, the extent of
defendant's potential liability remains, in the estimation of both
parties, in the billions of dollars," Kessler wrote in a 56-page ruling.

Tobacco industry officials had asked Kessler to throw out the entire
case, saying it was built on flawed legal theories. They said that
Kessler's decision was a "step in the right direction" and predicted they
ultimately will prevail. The Justice Department, meanwhile, said that the
preservation of the racketeering count means that the government still
will be able to attack the industry's "fraudulent conduct."

Industry analysts said they believed the ruling tilted in favor of the
government, noting that tobacco companies remain at legal risk. "The
bottom line is money," said Mary Aronson, a Washington-based litigation
analyst. "They still have a case."

Northeastern University law professor Richard A. Daynard, a longtime
opponent of the tobacco industry who heads the Tobacco Products Liability
Project, contended that Kessler actually did the government a favor by
dismissing the shakiest elements of its case. "I'm delighted," Daynard
said. "I think she made the case bulletproof."

Prodded by President Clinton, the Justice Department filed the lawsuit
one year ago, naming nine tobacco companies and two industry groups as
defendants. From the start, Attorney General Janet Reno and others said
one of their primary goals was to recover billions of dollars spent to
treat smoking-related diseases by the Medicare program and other
government health plans covering veterans and federal employees. The
other chief goal was to gain control of profits earned in what they
contended was a 45-year conspiracy by the industry to cover up health
risks and market its products to children.

At a hearing in June, government lawyers contended they could recover the
medical costs under the Medical Care Recovery Act, which affects veterans
and millions of federal employees, and under the Medicare provision of
the Social Security Act. But Kessler ruled that those laws could not be
used to pursue such damages, saying that Congress had not intended that
they be applied in such a sweeping manner.

She said it would be premature to dismiss the racketeering claim or rule
out damages. Under the racketeering law, the government can attempt to
"disgorge," or recover, profits stemming from unlawful conduct. The
tobacco industry argued that disgorgement should not be a remedy in the
case, but Kessler disagreed. Still to be decided, however, is exactly how
much the government could attempt to gain if it were to prove a
racketeering case.

Under the racketeering law, the Justice Department also wants the court
to order the industry to change its advertising and marketing practices.

The decision comes at a time when the Justice Department is trying to
convince Congress to continue funding the litigation. Kessler has said
that she intends to bring the case to trial in early 2003. Both sides are
due in court for a hearing early October.

Clinton said the lawsuit "remains a very important opportunity for the
American people to have their day in court against Big Tobacco and its
marketing practices. I urge Congress to provide the funding to allow the
lawsuit to move forward and not to shield the tobacco industry from the
consequences of its actions."

The issue has divided the presidential candidates. Vice President Gore,
the Democrat, supports tough action against the industry, while Texas
Gov. George W. Bush (R) criticized the lawsuit when it was brought last

The tobacco industry acted in 1998 to settle lawsuits filed by more than
three dozen state governments at a cost of $ 240 billion over 25 years.
The industry also faces hundreds of individual civil complaints. In July,
a Miami jury ordered the industry to pay $ 145 billion in punitive
damages in a class action suit covering hundreds of thousands of Florida
smokers suffering from diseases linked to smoking cigarettes.

William S. Ohlemeyer, vice president and general counsel for Philip
Morris Cos., said the government's racketeering claim fails to take into
account the changes brought on by the settlements with the states. Other
industry lawyers predicted that the government's ability to collect
damages will be limited because the Justice Department will be unable to
prove that the companies are engaging in continuing illegal acts.

Ohlemeyer and other lawyers had argued that the government has never used
the racketeering statute to go after an entire industry. In court papers,
the Justice Department countered that "the scale of defendants' illegal
conduct and the scope of the harm that it has caused are truly
unprecedented. Defendants cannot rely on the sheer massiveness of their
wrongdoing to defeat this suit."

Defendants in the case include Philip Morris Inc.; Philip Morris Cos.
Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp.;
Lorillard Tobacco Co.; American Tobacco Co.; British-American Tobacco
Industries PLC; British-American Tobacco (Investments) Ltd.; the Council
for Tobacco Research, and the Tobacco Institute Inc.

In a separate ruling, Kessler granted a motion dismissing
British-American Tobacco Industries as a defendant in the lawsuit, citing
procedural grounds. (The Washington Post, September 29, 2000)

* New Regulation FD Warrants Reexamination of Disclosure Practices
Byline: BY PAUL A. FERRILLO; Paul A. Ferrillo is vice president and
associate general counsel of National Union Fire Insurance Company of
Pittsburgh, Pa., a wholly owned subsidiary of the American International
Group, Inc. Michael K. Rappaport, assistant vice president with National
Union, assisted in the preparation of this article.

On Aug. 10, 2000, the United States Securities and Exchange Commission
(SEC) approved Regulation FD (Fair Disclosure), a new rule designed to
halt the practice of selective disclosure, a practice by which companies
release material non-public information to selected insiders (typically
market analysts or big investors) before disclosing that information to
the general public. Two other rules (Rule 10b5-1 and 10b5-2, dealing with
insider trading issues) were approved the same day as Regulation FD. This
article will limit itself to a discussion of Regulation FD.

SEC Chairman Arthur Levitt had previously condemned the practice, noting
that "[the] behind-the-scenes feeding of material non-public information
from companies to analysts is a stain on our markets." "Quality
Information: The Lifeblood of Our Markets," Remarks by Chairman Levitt at
the Economic Club of New York, Oct. 18, 1999.

Although Regulation FD expressly states that it does not create an
additional area of potential liability for fraud, it will compel certain
changes in how companies deal with analysts in order to comply with its
provisions. More importantly, companies will now be forced to reexamine
their broader investor relations practices in order to safeguard against
being drawn into an SEC enforcement action, or worse yet, a potentially
company-threatening securities fraud class action litigation where
allegations of "entanglement" with analyst communications or reports
could contribute to an unfavorable result.

This article will explore the substance of Regulation FD and its
potential relationship to traditional areas of liability involving
analyst communications, and offer some practical advice on conducting
future dealings with analysts so as to comply with the rule's provisions.

First, why all the fuss over selective disclosure to analysts in the
first place? There is no question that an analyst plays a critical role
in a company's communications with the market. Favorable analyst "buy"
recommendations can move a stock price dramatically higher, while
unfavorable or even neutral comments may trigger a material stock price
drop. For this reason, a company walks a proverbial tightrope when making
selective disclosures to the very analysts that they also fear.

Whether a company successfully navigates along this "disclosure
tightrope" when dealing with analysts depends on its ability to balance
its desire for favorable press coverage (hopefully generating a stock
price increase) against the competing pressure of the market's demand for
instantaneous information, and the disclosure and anti-fraud requirements
of our federal securities laws. In fact, companies walk this tightrope
constantly. A 1998 study of corporate disclosure practices by the
National Investor Relations Institute reported that 26 percent of
responding companies engaged in some type of selective disclosure

So then, what's the problem? Well, the company's stock price can move
dramatically based upon this selective disclosure of material
information, benefiting some investors (typically large ones that become
privy to the information) but not the individual investor. Here are some
dramatic examples.

In July 1999, at a Sun Valley, Idaho conference, a CEO reportedly
informed a meeting of other CEOs and investors that his company would be
announcing favorable quarterly earnings estimates. The stock gained about
6 percent that day. "Left Out of the Loop," The Plain Dealer, Dec. 20,

In September 1999, officials at a computer company reportedly phoned
several analysts, informing them that a Taiwan earthquake had disrupted
production and might lower revenue for the next quarter by $ 50 million.
The stock fell 7 percent over the next three days. Id.

On Oct. 8, 1999, a retail company executive reportedly told an analyst
that quarterly sales would fall short of expectations. The stock dropped
15 percent over five days until the company confirmed the sales shortfall
publicly. Id.

This last example generated not only a shareholder action, but also a
simultaneous SEC investigation as to the nature of the disclosure to the
analyst in question.

Another study of investor relations practices revealed that, during and
immediately following conference calls between analysts and issuers,
trading volume in the issuers' stock increased, the average trade size
increased, and stock price volatility increased. These observations led
researchers to conclude that material information is selectively released
during these periods, which is then immediately filtered to a subset of
large investors (typically favored customers of the brokerage house for
which the analyst works) who are able to trade on the information before
it is disseminated to the market. Frankel, et. al., "An Empirical
Examination of Conference Calls as a Voluntary Disclosure Medium," J.
Acct. Res. 133 (Spring 1999).

Obviously, the small investor is tremendously disadvantaged because he or
she simply will not have the same access to material non-public
information as those "in the know." Inevitably, the practice of selective
disclosure drew the ire of Chairman Levitt. In his Oct. 19, 1999, speech
at the Economic Club of New York, he stated that:

This selectiveness is a disservice to investors and it undermines the
fundamental principle of fairness. In a time when instantaneous and free
flowing information is the norm, these sort of whispers are an insult to
fair and public disclosure.

Spurred on by Chairman Levitt's comments, on Dec. 20, 1999, the SEC
proposed Regulation FD (Release Numbers 33-7787 and 34-42259). After a
lengthy comment period, on Aug. 10, 2000, the Commission approved it in a
somewhat modified form (Release No. 33-7881 and 34-43154) which narrowed
its proposed application "only to communications to securities market

                          Parsing the Regulation

Here is what Rule 100 of Regulation FD provides. Whenever a
company/issuer, or one who acts on its behalf, intentionally discloses
material non-public information to certain enumerated persons outside the
company, it must simultaneously disclose such information to the public.
If such a disclosure of material information was made unintentionally
(i.e. a mistake or a slip of the tongue), then the company must disclose
such information to the public as soon as reasonably practicable
(generally no more than 24 hours after the company learned of the
unintentional disclosure).

Importantly, a failure to comply with the provisions of Regulation FD
will not, in and of itself, create any additional private right of action
under Rule 10b-5 of the 1934 Act. However, the SEC could bring an
enforcement action under Regulation FD, seeking an injunction and/or
civil monetary penalties.

Regulation FD raises as many interesting questions as the broader issue
it addresses. First, at which class of individuals "outside" the company
is it aimed? It should not come as a surprise that Regulation FD aims to
regulate selective disclosure to 1) broker-dealers, 2) investment
advisers and certain institutional investment managers, 3) investment
companies and hedge funds, and 4) any holder of the company's securities,
under circumstances in which it is reasonably foreseeable that such
person would purchase or sell securities on the basis of such nonpublic

Is anyone exempted from Regulation FD? Yes. The rule excludes from
coverage communications with "temporary" company insiders, such as the
company's attorneys, investment bankers and accountants, as well as those
who expressly agree to maintain the information in confidence. The
regulation also excludes from coverage communications with the press or
ratings agencies, or ordinary-course-of-business communications with
customers and suppliers.

To whom within the company/issuer does Regulation FD apply? To
disclosures made by the company's senior officials or other officers,
employees or agents who regularly communicate with the market. This could
include a company's directors and executive officers, as well as
employees who handle the company's investor relations functions.

If a company makes a selective disclosure of material non-public
information (whether intentionally or accidentally), how should such
information be simultaneously or promptly disclosed to the public? The
regulation states that disclosure to the public can be made by the filing
or the furnishing of a Form 8-K, or by disseminating information "through
another method (or combination of methods) of disclosure that is
reasonably designed to provide broad, non-exclusionary distribution of
information to the public."

Are press releases and open conference calls (with adequate notice to the
public) acceptable methods of communication? The answer is probably yes.
The SEC will likely not object to any method or methods of communication
that are reasonably likely to get the word out to the public in a broad
and effective manner. Can companies use their Web sites to discharge
their disclosure obligations to the public? Not yet. However, in
combination with other, more traditional methods of communication (i.e. a
press release issued to the wire services), a Web site posting may
certainly help satisfy Regulation FD's disclosure requirements.

                      Materiality, 'Guidance'

Does Regulation FD provide any definition within as to what is "material,
non-public information?" Actually, no, and this should give investor
relations (IR) managers and securities lawyers some pause for concern.
Though the topic of materiality was analyzed heavily during the public
comment period, the Commission decided not to provide a bright-line
definition, instead relying upon the time-tested one: whether there was a
substantial likelihood that the information in question "would have been
viewed by the reasonable investor as having significantly altered the
'total mix' of information made available." (TSC Industries, Inc. v.
Northway, Inc., 426 U.S. 438, 449 (1976).)

In the absence of any definition of materiality, basic advice to any
senior executive or IR professional having questions as to whether a
certain piece of non-public information is, in fact, material or not
would be to "stop, look and seek advice from your corporate counsel."
However, in its release, the SEC did mention several types of information
or events which could be viewed as potentially material:

(1) earnings information,

(2) mergers, acquisitions or tender offers,

(3) new products or discoveries, or developments regarding customers or
      suppliers (i.e. the loss of a big contract),

4) changes in control or management,

5) a change in auditors or auditor notification that the issuer may no
    longer rely on the auditor's report,

6) events regarding the issuer's securities (i.e. a default on debt
     securities, call of securities for redemption, stock splits or
     changes in dividends), and

7) bankruptcies or receiverships.

While the above list is illustrative, the lack of a bright-line
definition will ultimately spur debates as to whether other information -
for example, a company's change in accounting principles (i.e. from
pooling to purchase accounting) - is deemed material under Regulation FD.

Further, what about some of the hazier areas like the time-honored
practice of giving "guidance" to analysts regarding future results? Also,
what about the practice of reviewing an analyst's report prior to its
release to the public? Would these practices run afoul of the regulation,
and have potential implications in a securities class action? Though Rule
102 of Regulation FD is very clear that a violation of the regulation
will not create an additional area of liability under Rule 10b-5 of the
Exchange Act, the answers to both of the above questions is,
unfortunately, "maybe."

Certainly, the practice of providing guidance to the market will not end
with Regulation FD's adoption. It will now just be a matter of "how to do
it." If the "guidance" will include material non-public information, it
should be in the form of a publicly disseminated press release, or an
open conference call with adequate notice to the public prior thereto.
However, if analysts demand follow-up information in a one-on-one
setting, going beyond the information contained in the release by sharing
additional material, non-public information will run afoul of Regulation
FD, which demands broad, not selective, disclosure.

It goes without saying that Regulation FD would not protect a company
from disclosing (selectively or otherwise) misleading information in
either a Form 8K or press release. Such a material misrepresentation
(and/or omission) always has the potential to violate the provisions of
Rule 10b-5.

Similarly, merely reviewing draft analyst reports for pure factual errors
is probably OK. Presumably, no material non-public information would be
changing hands. However, either by commenting upon, or urging that
changes be made to, analyst reports, there is certainly some risk that
material, non-public information will change hands in a manner which may
potentially violate Regulation FD. A potentially bigger problem is that
the company might be so involving itself in the preparation of the report
that it could be held responsible for its contents under the
"entanglement" theory of liability. (See Elkind v. Liggett & Myers, Inc.,
635 F. 2d 156 (2nd Cir. 1980).)

Under this traditional theory under Rule 10b-5 (a theory long predating
Regulation FD), by taking part in the preparation of analyst reports
and/or projections, a company could assume a duty to correct material
errors in them, or perhaps even a duty to update them should
circumstances change. A violation of Regulation FD in this respect,
perhaps even highlighted to the plaintiff's bar by an SEC enforcement
action, could under some circumstances find its way into a securities
class action complaint with not a lot of creativity.

The other traditional area of liability involving communications with
analysts deals with "adoption." This is a theory by which a company can
be held liable for statements made in analyst reports after their
publication by either explicitly or implicitly approving of their
contents, or by distributing analyst reports to their investors. See
Bochner, "Over the Wall: Handling Securities Analysts' Conference Calls,
Earnings Forecasts, and Reports Effectively," at p.4. Since Regulation FD
deals mainly with the selective disclosure of information prior to its
release to the public, it will not likely affect or contribute to
potential liability under the adoption theory of liability.

                           Practice Guidelines

The adoption of Regulation FD presents a good opportunity for companies
to comprehensively review their investor relations practices and their
practices for dealing independently with analysts and the market at
large. Here are some of the better practice points to follow:

* Limit the number of authorized spokespersons for the company.

* Adopt a strong "blackout period" with analysts at the end of the

* Open up quarterly conference calls to the public. Given the
    probability of more frequent public disclosures, make proper and
    frequent use of the safe harbor provisions of the Private Securities
    Litigation Reform Act for both oral and written disclosures.

* Do not review or comment upon analyst reports (except, as noted above,
    if there is a necessity to correct factual errors).

(See generally, David, "New SEC Regulations Address Selective Disclosure
and Clarify Insider Trading Standards" (Alston & Bird Securities
Advisory, August 2000).)

Regulation FD is here to stay, and goes into effect on Oct. 23, 2000.
Make good use of this interim period to assure that your company or
client not only stays out of the SEC's enforcement doghouse, but steers
clear of larger issues dealing with communications with analysts. (New
York Law Journal, September 20, 2000)


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