CAR_Public/001211.MBX              C L A S S   A C T I O N   R E P O R T E R

             Friday, December 8, 2000, Vol. 2, No. 238

                             Headlines

ANCHOR GAMING: Fed Securities Suit in NV Dismissed; State Action Stayed
ASBESTOS LITIGATION: Potential Liability Pushes Armstrong Bankruptcy
BRIDGESTONE, FORD: Lawyers Hold Preliminary Settlement Talks
BRIDGESTONE/FIRESTONE, FORD: Tire death toll at 148 mostly on Explorer
COLORADO: Agrees to Restore Medicaid Coverage in Lawsuit Settlement

DRKOOP.COM: Health Web Site May Lose Nasdaq Listing
FIRESTONE, FORD: Judge to Set Up Rules for Tire Lawsuits
GOVERNOR: Davis Seeks Cut In $88.5M Lawyers' Fees in Motorists Fees Case
HOLOCAUST VICTIMS: Austrian Restitution for Stolen Property in Sight
INMATES LITIGATION: 5th Cir holds ACLU can replace MS lawyer in HIV Case

INMATES LITIGATION: Suit Filed over St. Martin Hostage-Taking by Cubans
PASADENA UNIFIED: Parents Sue to Halt Student Activity Fees under CA Law
PLC SYSTEMS: Announces Pending Settlement of Securities Suit in MA
PLC SYSTEMS: Summary Notice of Pendency of Class Action
SCOTT HINKLEY: Trustee To Take Bids On Rare Sports Car

SEMPRA ENERGY: Named in Lawsuit over Electric Prices in California
ST. CLOUD: Settlement Reached in Gender University Discrimination Case
TENNESSEE: Supreme Court Finds State Abortion Laws Unconstitutional
TURKCELL ILETISIM: Milberg Weiss Announces Securities Suit Filed in NY
TURKCELL ILETISIM: Schiffrin & Barroway Files Securities Suit in NY

VOLKSWAGEN OF AMERICA: Fd Judge Upholds Charges on Malfunctioning Sensor
WAR VICTIMS: Kajima Corp Agrees to Settle Damage Suit By Chinese Laborer

* 3rd Circuit Offers New Interpretation Of Rule 10b-5 Requirement
* Reexamining Corporate Disclosure Practices By National Union VP

                               *********

ANCHOR GAMING: Fed Securities Suit in NV Dismissed; State Action Stayed
-----------------------------------------------------------------------
Several securities class action lawsuits have been filed against the
company and certain of its current and former officers and directors. The
lawsuits were filed in various jurisdictions following the company’s
announcement in early December 1997 that its results for the December
quarter might not meet analysts' expectations. The lawsuits have been
brought on behalf of a purported class of purchasers of the company’s stock
and allege violations of state and/or federal securities laws arising out
of alleged misstatements and omissions to state material facts over various
periods of time covered by the suits. The lawsuits were consolidated in
Nevada, both in federal and state court. The consolidated federal action,
captioned In re Anchor Gaming Securities Litigation, Civil Action No.
CV-S-97-01751-PMP (RJJ), was dismissed on January 6, 1999 with the court
entering a judgment in the company’s favor. The consolidated state action,
captioned Ryan, et al. v. Anchor Gaming, et al., Civil No. 98-A383456-C,
has been stayed by order of the court. Certain other actions have been
transferred and/or dismissed. The company believes that the claims are
without merit, and intends to vigorously contest the lawsuits.


ASBESTOS LITIGATION: Potential Liability Pushes Armstrong Bankruptcy
--------------------------------------------------------------------
Facing massive potential liability over asbestos insulation it manufactured
in the 1960s, Armstrong World Industries Inc. filed for protection from its
creditors while it develops a reorganization plan under Chapter 11 of the
federal bankruptcy laws.

The manufacturer of floor-and-ceiling materials said it had tried several
approaches to managing its asbestos liability but was faced with mounting
costs from legal settlements that threatened its long-term financial
health.

"Our historical approach to resolving asbestos claims has not worked. The
actions that would now be required to wait for legislation -- for which
there is no reasonable hope for quick passage -- would reduce our ability
to invest in our businesses," said Michael Lockhart, chairman and chief
executive officer of Armstrong World's parent company, Armstrong Holdings
Inc., which was not part of the filing.

"Filing for protection under Chapter 11 was the best option we had," he
said.

Investors appeared unimpressed. Armstrong's shares closed down 12.5 cents
to 94 cents in trading on Wednesday on the New York Stock Exchange, a 12
percent drop from Tuesday.

"This is not a surprise," said Lawrence Horan, analyst with
Pittsburgh-based Parker/Hunter Inc. "Basically things got out of control in
terms of the asbestos claims."

Armstrong World faces about 173,000 personal-injury claims alleging harm
from asbestos insulation it manufactured in the 1960s. It estimates that
potential liability could reach $ 1.4 billion.

Chase Manhattan Bank agreed to provide $ 400 million in
debtor-in-possession credit subject to approval by a federal court in
Wilmington, Del., the company said. Lockhart said that money would be used
to maintain the company's daily operations.

"We're open for business and operations are continuing as normal," he said.

Also filing for relief were two of Armstrong World Industries subsidiaries,
Nitram Liquidators Inc. and Desseaux Corp. of North America Inc.

Armstrong said suppliers will be paid on normal terms for goods and
services provided after the filing. Employee pay and benefits will not be
interrupted, the company said.

The company signaled a possible filing for bankruptcy protection to the
U.S. Securities and Exchange Commission last month.

A group of banks led by Chase Manhattan halted a $ 400 million, one-year
credit line for the company that would have replaced one that expired Oct.
19, citing concerns about Armstrong World's potential legal liabilities.

Armstrong had early hope of relief in the early 1990s when it and other
asbestos manufacturers forged a $ 1.3 billion national class-action
settlement to resolve hundreds of thousands of legal claims. But the
solution never took effect after the U.S. Supreme Court in 1997 threw it
out as unfair to all plaintiffs.

Since then, Armstrong has paid about $ 100 million annually to settle some
of the lawsuits.

Armstrong Holdings employs 18,000 people worldwide and has annual revenue
of more than $ 3.4 billion. (Pittsburgh Post-Gazette, December 7, 2000)


BRIDGESTONE, FORD: Lawyers Hold Preliminary Settlement Talks
------------------------------------------------------------
Lawyers of tyre manufaturer Bridgestone and Ford Motor have held
preliminary meetings with plaintiffs' attorneys to discuss lawsuits.

The lawsuits arose from 148 deaths linked to accidents, allegedly triggered
by unsafe tyres.

Lawyers of both parties said settlement, at this point, is premature,
although several personal injury lawsuits have been privately settled.

They said they were talking directly in a bid to avoid bringing in a third
party to mediate.

But lawyers for both companies said they would fend off any class action
product liability lawsuits, in which there was no personal injury. (Channel
NewsAsia, December 7, 2000)


BRIDGESTONE/FIRESTONE, FORD: Tire death toll at 148 mostly on Explorer
----------------------------------------------------------------------
Federal safety officials Wednesday linked another 29 deaths to failed
Firestone tires, mostly on Ford Explorer sport utility vehicles.

That increases to 148 the death toll attributed to ATX, ATX II and
Wilderness AT tires. More than 500 injuries also have been linked to the
tires.

The announcement came as Bridgestone/Firestone Inc., Ford Motor Co. and the
National Highway Traffic Safety Administration are accelerating efforts to
determine the cause of the deadly tread separations.

The investigations have been proceeding at a quickening pace since
Firestone agreed to recall 6.5 million tires on August 9. But Firestone,
Ford and the safety agency haven't determined the "root cause" of tires'
failure.

Agency administrator Dr. Sue Bailey reiterated again Wednesday that the
tire investigation was her agency's "top priority." She said government
researchers would meet with Firestone and Ford officials next week in
Washington, with hopes of agreeing on the cause of the tire failures by
year's end.

"The more great minds working on this, the better," Bailey said.

After public squabbles with its longtime tire supplier over the recall,
Ford Chief Executive Jacques Nasser said the automaker is now "cooperating"
with Bridgestone and closing in on the cause of the Firestone tire
failures.

"We are cooperating," Nasser said in an interview. "Ultimately the
challenge is to find out exactly what happened, to find the root cause. We
are about 90 percent there."

Nasser said he expects Ford and Bridgestone to issue their findings before
the end of the year.

"The first reports will come out in the next few weeks," Nasser said. "When
we do, it will certainly be done involving NHTSA."

Firestone's investigation has centered on the design of the recalled tires
and the manufacturing processes at its Decatur, Ill. factory, where most of
the tires were made. The tiremaker also suspects the Explorer may
contribute to the failure.

Ford, however, has adamantly insisted that it is a tire problem and not a
vehicle problem. That issue led to public finger-pointing by the two
companies during Congressional hearings earlier this year.

In an interview Wednesday, Ford's director of automotive safety, Lou Camp,
said the problem was still eluding the automaker's engineers. "The fact is
we haven't figured it out yet," he said. "We still don't know the root
cause."

Bridgestone/Firestone is facing mounting difficulties in the courtroom with
more than 200 major product liability lawsuits are pending.

Analysts estimate the company could be facing between $500 million and $1
billion in settlement costs, though Bridgestone has set aside $450 million
in reserves to cover claims and settlements.

In Indianapolis Wednesday, lawyers for Firestone and plaintiffs told U.S.
District Judge Sarah Evans Barker that they don't want a third party to
mediate negotiations aimed at settling the more than 150 cases consolidated
in her court.

Ford and Bridgestone/Firestone lawyers said Wednesday prospects for a
settlement are premature. The companies have settled scores of
personal-injury suits privately, but plan to oppose class-action
product-liability cases in which nobody was injured. (The Detroit News,
December 7, 2000)


COLORADO: Agrees to Restore Medicaid Coverage in Lawsuit Settlement
-------------------------------------------------------------------
Colorado will spend $9 million to restore Medicaid coverage to about 40,000
low-income residents wrongly cut off from coverage since 1997 under a
lawsuit settlement agreement.

The lawsuit was filed Tuesday along with a settlement agreement the
plaintiffs had negotiated with the state over the past 10 months. The
agreement would have to be approved by a federal judge.

State officials said people were mistakenly cut off from coverage when a
state computer was not updated after passage of a 1996 federal welfare
reform law.

"It was obviously a profound error that this happened, and we regret that,"
said Diana Maiden, a manager with the state Department of Health Care
Policy and Financing. "But we do not think that people went without medical
coverage when they truly needed it."

The lawsuit claimed otherwise.

For example, it said Aloha Tatum's coverage was ended in August 1999 and
her premature newborn daughter Tearney Rose was discharged from a hospital
even though she was losing weight.

The lawsuit said Tatum has yet to get her Medicaid coverage straightened
out and could not schedule her daughter's four-month checkup.

In another case, the lawsuit said the Gabler-Alonzo family, which has a
3-year-old boy with cerebral palsy and a 17-month-old daughter who can't
keep down food, has had trouble maintaining relationships with medical
offices since its Medicaid coverage was wrongly ended.

"Ms. Gabler-Alonzo and her children have had to cancel appointments and
wait for long periods while the providers attempt to verify their Medicaid
status with calls to Social Services," the lawsuit said.

Attorneys for the plaintiffs said state officials immediately acknowledged
the mistakes and cooperated in reaching the settlement.

State officials said mistaken denials of Medicaid benefits have occurred
nationwide since Congress approved the law, and that other states have
reached similar settlements.

Before the 1996 change, people automatically lost Medicaid coverage if they
lost welfare benefits. Under the law, many people who became ineligible for
welfare benefits still could receive Medicaid coverage. Maiden said the
state computer handling the cutoffs before 1996 was not updated.

She said officials decided not to try to reprogram the aged computer, but
to work around the problem by training county social services workers to
keep people from wrongly losing coverage.

"When we saw the lawsuit, we knew we had a problem," Maiden said.

Under the settlement, the state would notify the more than 40,000 people
who wrongly lost Medicaid benefits and pay their outstanding medical bills
or reimburse them for spending their own money for medical care.

The federal government would pay half the estimated $18 million cost.

About 280,000 Coloradans receive Medicaid benefits. The state and federal
governments split the $2 billion annual cost. (The Associated Press State &
Local Wire, December 7, 2000)


DRKOOP.COM: Health Web Site May Lose Nasdaq Listing
---------------------------------------------------
Drkoop.com, the health Web site co-founded by former U.S. Surgeon General
C. Everett Koop of Hanover, N.H., is scrambling to keep from losing its
listing on the Nasdaq Stock Market.

The company has received a notice from Nasdaq that the company is on the
verge of being delisted because its stock price has been below $1 for 30
trading days.

The Austin-based company said Wednesday it plans to call a special meeting
of stockholders to vote on a reverse stock split to avoid that action.
Details of the possible split, which would increase share value by
decreasing the number of shares outstanding, were not released.

"We consider the maintenance of our Nasdaq National Market listing to be
very important and intend to take the appropriate steps to ensure that we
maintain it," said Richard Rosenblatt, chief executive officer.

Drkoop.com shares have been below $1 since Oct. 18, when shares closed at
90.6 cents. On Wednesday, the stock hit a new 52-week low of 43.8 cents,
down nearly 18 percent, or 9.3 cents, on the Nasdaq Stock Market.

The company, which in August laid off a third of its work force and hired a
new management team, has been struggling for some time.

When it went public in July 1999, drkoop.com stock sold as high as $45. It
has lingered in the $1 range for several months.

In April, officials announced the company only had enough cash to survive
until August. The announcement came after the company disclosed in March
that its auditors had cast doubt on its ability to remain in business.

Several shareholders sought class-action status in a lawsuit claiming the
company made false promises when it went public.

Despite the problems, the company's new managers say they are optimistic.

"Since the new management team arrived at drkoop.com, we have generated
significant momentum, reduced the cash burn rate, attracted high caliber
individuals and strengthened our relationships with many of our partners.
We continue moving forward on our turnaround plan," Rosenblatt said.

Last month, drkoop.com bought the assets of drDrew.com, an online lifestyle
community for young adults.

Surgeon general from 1982 to 1989, Koop now heads the Koop Institute at
Dartmouth College. (The Associated Press State & Local Wire, December 7,
2000)


FIRESTONE, FORD: Judge to Set Up Rules for Tire Lawsuits
--------------------------------------------------------
The scores of lawsuits against Bridgestone/Firestone Inc. and Ford Motor
Co. took several small steps forward Wednesday, though it could be a year
before the first case goes to trial.

Chief U.S. District Judge Sarah Evans Barker presided over a hearing
attended by dozens of lawyers to discuss how plaintiffs' attorneys should
be organized and other technical matters of going to trial.

Barker expects to issue an order on the hearing by the end of the week.
Within 21 days, she wants plaintiffs' attorneys to file an amended master
complaint encompassing all Firestone and Ford cases related to tire tread
separation or Ford Explorer rollovers, which are blamed for 194 deaths,
including 148 in the United States.

Appointed by President Reagan and a firm taskmaster, Barker did not embrace
efforts on behalf of advocacy groups and news media.

She looked askance at a suggestion that public interest groups, such as
Public Citizen and the Center for Automotive Safety, be part of the formal
plaintiff organization.

Since the lawyer representing the center, Michael Hausfeld of Cohen,
Milstein, Hausfeld & Toll in Washington, D.C., also represents specific
plaintiffs, a conflict of interest is inevitable, she said. Barker also
expressed concerns that safety-group involvement could slow proceedings.

"What's to keep you from being just a gadfly?" she asked.

Barker was even less receptive to media inspection of documents.

Daniel Byron of McHale Cook & Welch in Indianapolis represented Dow Jones
Co., publisher of the Wall Street Journal, and Bloomberg LP. He argued that
media should have access to the Akron, Ohio, repository of corporate
documents some covered by confidentiality agreements -- that plaintiffs can
review.

Barker sounded incredulous about releasing those papers.

"I'm surprised that you believe you have authority for that. ... I don't
read it that way," she said.

To speed up the proceedings, Victor Diaz, a Miami lawyer and co-lead
counsel for the plaintiffs, asked that the magistrate judge assisting
Barker supervise settlement talks. He said judicial mediation has proven
effective in quickly resolving other cases.

Defense lawyers said it was too soon to talk about settlements. They
requested detailed information on specific personal injury and wrongful
death suits.

"We don't have any information to work with yet," said John Beisner, a
Washington, D.C., lawyer who represents Ford.

Ford has no interest in talking about the class actions, Beisner said,
because it will likely move to dismiss claims in which customers did not
experience problems with their vehicles. (Detroit Free Press, December 7,
2000)


GOVERNOR: Davis Seeks Cut In $88.5M Lawyers' Fees in Motorists Fees Case
------------------------------------------------------------------------
In a surprise turnaround, Gov. Gray Davis on Wednesday urged that
Controller Kathleen Connell hold up an $ 88.5-million payment to lawyers
who sued the state to overturn a fee on motorists who registered
out-of-state vehicles in California in the 1990s.

Characterizing the award as excessive, Davis called on the private
arbitrators who granted it to reconsider their decision, even though Davis
earlier this year pushed private arbitration to decide the issue.

Davis' announcement followed press inquiries about the unusually high
award, in which major political contributors to Davis would share, and
bitter complaints by Connell and State Board of Equalization member Dean
Andal.

Connell, who blasted the $ 88.5-million award when it was announced, said
she was "delighted" by Davis' move. Connell said she already had decided to
seek a court order allowing her to suspend the payment.

She said she intends to seek approval for that step from the Board of
Equalization, which oversees tax policy for the state. If Connell fails,
the attorneys must be paid by Dec. 28, according to the arbitration
agreement.

Officials believe the $ 88.5 million is the largest attorneys' fee award
ever in a lawsuit against the state, and it may be the first granted
through binding arbitration. The firms won it after successfully suing
California over the $ 300 "smog impact" fee charged for out-of-state
vehicles.

As an alternative to arbitration, the state could have left the question to
courts or resolved it in court-supervised mediation. Binding arbitration is
unusual for the state, because the state cedes significant power in
agreeing to follow a panel's decision.

The state's chance of blocking the award is not known. An agreement signed
by the private lawyers and attorneys for the state says the arbitration
panel's decision is final.

"This award shall be binding on all parties, and there is no right of
appeal, collateral attack or other review," says the agreement, dated July
20.

The private lawyers were taken aback by Davis' announcement.

"This is news to me," said William Dato, attorney at Milberg, Weiss,
Bershan, Haynes & Lerach, one of five firms that would share in the $ 88.5
million. Dato said a confidentiality clause in the arbitration agreement
precludes him from discussing it further.

'Beyond Any Notion of a Reasonable Fee'

Last year Davis, citing a state Court of Appeal ruling declaring the smog
charge unconstitutional, stopped collection of the fee and abandoned
further appeal to the state Supreme Court.

Earlier this year, Davis signed legislation earmarking $ 665 million to
repay owners of an estimated 1.7 million vehicles who paid the fees. At
Davis' request, the legislation included a provision that lawyers' fees be
set by private arbitrators.

"However, I believe the attorneys' fee award in this case goes far beyond
any notion of a reasonable fee for the attorneys' efforts," Davis said in a
written statement.

Unless the award is somehow reduced, the governor's decision to send the
issue to arbitrators will cost state taxpayers tens of millions.

Public records, interviews and documents obtained by The Times show that:

In March, the lawyers who sued the state were prepared to accept $ 25
million.

In April, the state Board of Equalization, which was a defendant in the
smog fee case, said the lawyers deserved no more than $ 1 million. Board
lawyers, relying on arcane points of the law, argued that since no judge
had deemed the case to be a class action, the lawyers were entitled to no
fees, or at least to relatively modest sums.

As late as May, the California attorney general's office, which defended
the state in the litigation, was prepared to fight a Sacramento Superior
Court judge's 1998 decision to give the lawyers $ 18 million.

If the courts had decided the question, the most the attorneys could have
expected was $ 18 million--and perhaps significantly less, some experts
say.

The law firms, which filed suits in 1995 on behalf of motorists who paid
the fee, submitted time sheets to the Sacramento judge showing they worked
about 7,900 hours on the case. Their rates ranged from $ 495 an hour for a
senior partner to $ 60 an hour for a law clerk.

Even if the attorneys put in another 1,000 hours on the appeal, the $ 88.5
million amounts to more than $ 9,900 an hour. The arbitration panel awarded
them a flat 13.3% of the money set aside by the Legislature, saying the
lawyers achieved an "exceptional result" for motorists who paid the fee.

Davis advocated private arbitration believing that the panel would give
lawyers less than $ 18 million awarded by the Superior Court judge.

"I supported the concept of arbitration with the expectation that the fee
award would be less than the amount determined by the trial court, not
substantially more," Davis said.

                   Davis Defends Use of Arbitration

In brief comments, Davis defended the decision to turn the attorneys' fee
question over to an arbitrator.

The Democratic governor noted that his appointee to the three-member
arbitration panel was retired Supreme Court Justice Malcolm M. Lucas, a
conservative and former law partner of Republican Gov. George Deukmejian.
The plaintiffs' lawyers picked a second retired judge, John K. Trotter, and
both sides agreed on a third former judge, Bonnie Lee Martin.

"I couldn't have picked a more conservative arbitrator," Davis said.

The panel's written ruling said the firms asked for 17.5%, or $ 116
million, of the $ 665 million. The panel noted that the plaintiffs'
attorneys received support in their request from two other former Supreme
Court justices, John Arguelles and William Clark, who like Lucas had been
appointed by Republicans.

University of Texas law professor Charles Silver, who also testified on
behalf of the private firms, called criticism of the amount an example of
the "demonization" of plaintiffs' lawyers. But he also said states rarely,
if ever, agree to have attorneys' fees set in binding arbitration.

"It is very hard to get money out of the state," Silver said. "Very
commonly, things get compromised way down."

Indeed, it may be the first time that California turned such a decision
over to private arbitrators.

Wayne R. Smith, a Sacramento attorney who was chief of staff for Republican
Atty. Gen. Dan Lungren, noted that the state has almost limitless capacity
to litigate, and can drag out questions about attorneys' fees for months or
years.

If it had followed more traditional procedures, the state would have
arrived at the attorneys' fees in settlement negotiations, or allowed
courts to decide the dollar amount. "I'd be shocked if you can find any
government lawyers who are in favor of binding arbitration; it gives up
power," Smith said.

Former California Atty. Gen. John Van de Kamp, a Democrat, also could not
recall allowing an arbitrator to decide such matters.

"We were very hesitant to put a case of this size before an arbitration
panel without reviewability by the courts, simply because the state would
want review should it go off base," Van de Kamp said.

Unlike most court hearings, the arbitration hearing was held behind closed
doors. Officials refused to release documents the panel considered before
rendering its decision, saying the arbitration agreement requires that they
be confidential. Even the amount the arbitrators were paid is being
withheld.

The panel's written decision initially was confidential. It might not have
become public but for the outrage of Andal and Connell. Connell released it
in response to a California Public Records Act request from The Times.

Andal, saying he he has been "working overtime trying to figure out a way
to stop the payment," welcomed Davis' announcement, but also suggested that
it was motivated by potential criticism that the governor was aiding a
political contributor.

"Whether or not Wednesday's announcement is just cover for Gov. Davis or
will have the effect of having the arbitration panel reconsider, we do not
know," Andal said.

Milberg, Weiss, one of the five law firms that stands to benefit from the
attorneys' fee award, is a major donor to Davis and other Democrats. The
firm has given $ 958,000 in campaign donations since 1997, campaign finance
reports show.

Milberg, Weiss partner Bill Lerach and the firm gave Davis a combined $
221,000 in his 1998 campaign, and another $ 20,000 since he took office.
The firm gave $ 50,000 to state Atty. Gen. Bill Lockyer during his 1998
campaign, and $ 10,000 this year.

In addition to donating to campaigns, Milberg, Weiss has a Capitol
lobbyist. Lawyers in the firm and its lobbyist helped shape the legislation
that granted refunds to motorists. The firm reported spending $ 274,000 on
its overall Sacramento lobbying effort in 1999 and through the first nine
months of 2000.

There is no record that the other four law firms in the case have donated
money to Davis.

Phil Trounstine, Davis' communications director, said Davis wanted to "set
up a process to take himself out of the picture and handed it over to the
arbitrators." Trounstine also said Davis' lawyers feared that the Court of
Appeal could have raised the attorneys' fees beyond the $ 18 million
granted by the Sacramento judge.

State Senate President Pro Tem John L. Burton (D-San Francisco), who helped
steer the bill through the Legislature, defended the award, saying he was
"not going to second-guess a three-judge panel chaired by Malcolm Lucas."

"I guess the governor felt he had to do something," Burton said. (Los
Angeles Times, December 7, 2000)


HOLOCAUST VICTIMS: Austrian Restitution for Stolen Property in Sight
--------------------------------------------------------------------
"Austria accepts her responsibility arising out of the tragic history of
the 20th century and the horrendous crimes of the national socialist
regime. Our country is facing up to the light and dark sides of its past
and to the deeds of all Austrians, good and evil, as its responsibility" -
Wolfgang Schussel and Jorg Haider, February 3 2000.

More than 60 years after Adolf Hitler was welcomed back to his homeland by
250,000 cheering Viennese, Austria is finally coming to terms with one of
the darkest chapters in its history.

Out of Vienna's pre-war Jewish population of 185,000, more than 65,000
perished in the Holocaust, and the remainder fled the country, leaving most
of their possessions. Jewish apartments were pillaged, works of art and
antiquities carried away, and small shops were taken over without
compensation.

Six decades later, some victims will finally get something back. The
negotiations between Washington and Vienna over the restitution of stolen
Jewish property have reached a critical phase, as both the US
administration and the Austrian government strive to strike a deal before
President Bill Clinton leaves the White House.

The US side is led by deputy US Treasury Secretary Stuart Eizenstat, who
has successfully negotiated both with Germany and Switzerland. Austria is
seen as one of the last big items of unfinished business, and last week Mr
Eizenstat was back in Vienna for more talks.

Austria has pledged Dollars 150m (Sch2.4bn) to compensate for stolen Jewish
property, but Mr Eizenstat described this amount as insufficient. US lawyer
Ed Fagan, who represents Holocaust victims in several class-action suits,
claims that Austria owes as much as Dollars 5bn.

The potential sums needed to provide restitution for what was stolen and
lost between 1938 and 1945 are impossible to estimate. The Rothschilds were
Austria's best-known and wealthiest family, but another 33,000 Jewish
businesses were liquidated or "Aryanised" after Austria became part of
Germany following the 1938 "Anschluss".

Most Jews in Vienna, the main centre of Jewish life, did not own their
apartments but had cheap life-long rent contracts, which they lost through
expulsion. After the war, Austria did little to help former Jewish citizens
who wanted to reclaim their possessions.

Art collectors, who had fled, sometimes got their property back but were
barred from exporting the paintings and sculptures unless they bequeathed
part of it to the Austrian state. Those that did not wish to return
accepted very low compensation sums for their property. Others abandoned
their claims, as they saw no chance of getting fair value from Austria's
post-war judicial system.

Unlike Germany, Austria did not pay compensation to Austrian Jews who had
been victims of Nazi persecution, and there remains a suspicion that
Austria's main political parties and its powerful trade union movement
benefited from property stolen from the Jews.

Thomas Klestil, Austria's president, has found the situation particularly
embarrassing in his search for a new home. Most of the properties that he
was interested in have turned out to have once been owned by Jews who had
not been compensated.

Still, the Austrian government rightfully claims that it has tried hard in
recent years to make up for earlier mistakes. In 1988, it set up the
"National Fund for the victims of National Socialism", which made a one-off
payment of Sch70,000 to all surviving pre-war Jewish residents at a total
cost of Sch2.4bn.

In 1996, the government auctioned 8,000 works of art expropriated from
Jewish families, which had sat for decades in the Mauerbach monastery
outside Vienna. The receipts of Sch155m went to the Jewish community in
Austria.

When, in 1997, a New York court seized two paintings by the expressionist
artist Egon Schiele on exhibition in the Museum of Modern Art after two
Jewish families laid claim on the pieces, the government searched all
state-owned collections for stolen works of art and returned several
hundred of them to their former owners.

Ironically, the entry of Jorg Haider's far-right FPO into the government in
February accelerated the restitution process. Faced with massive
international criticism of his government, Chancellor Wolfgang Schussel
pressed ahead with a deal to compensate slave labourers.

A Sch6bn fund for slave and forced labourers, backed by the government and
business, was set up in October and will start paying out early next year.
Ernst Sucharipa, one of Austria's most respected diplomats, has been
appointed to negotiate a deal on the even more sensitive question of
property restitution.

There have also been other gestures on reconciliation. On the Vienna
Judenplatz, the site for the medieval Jewish ghetto, a Holocaust memorial
has been built. Graz, Austria's second-largest city, has just rebuilt the
synagogue that was burned down in November 1938.

There is a consensus among all parties involved that money alone cannot
make up for earlier crimes and misdeeds. But as Ariel Muzicant, the
president of the Vienna Jewish Community, says: "Our goal is to find out
what happened after 1945, and even more what did not happen."

The Austrian government has set up an historical commission with more than
100 historians to provide the answer to these and other questions. Its
mandate is to report on the "looting of property in the territory of the
Republic of Austria in the Nazi era and acts of restitution and/or
compensation (including economic and social benefits) by the Republic of
Austria after 1945".

It will be another two years, at least, before it publishes its final
report. (Financial Times (London), December 7, 2000)


INMATES LITIGATION: 5th Cir holds ACLU can replace MS lawyer in HIV Case
------------------------------------------------------------------------
THE AMERICAN Civil Liberties Union National Prison Project has won the
latest battle in a four-year turf war with a solo practitioner to become
counsel for HIV-infected inmates in Mississippi.

The U.S. Court of Appeals for the 5th Circuit on Nov. 20 removed inmate
class counsel Ronald R. Welch of Jackson, Miss., who has spent 20 years
representing inmate classes in his state. The ACLU cites his close
relations with state officials and scant resources as reasons for removal.

"Welch's nonfeasance and the constraints upon his ability . . . urge the
rare remedy of substitution," the appeals court ruled in its 2-1 decision
in Nazareth v. Cook.

Mr. Welch criticized Circuit Judge Fortunato P. Benavides' opinion for its
adoption of "the facts alleged by the ACLU . . . down the line." He said
that he will seek a rehearing.

Mr. Welch was appointed to represent the class in 1993, after two
HIV-infected prisoners sued over conditions in the state's Parchman prison.
ACLU officials said that the settlement Mr. Welch negotiated in June 1995
made no provision for crucial drug treatments and also made it difficult
for inmates to sue over prison conditions.

Since that agreement -- which the inmate class counsel continues to
supervise, thus earning fees -- HIV-infected inmates have written the ACLU
complaining of substandard housing, retaliation, exclusion from general
prison activities and a lack of access to new drug therapies. Those are all
things that the ACLU contends Mr. Welch was responsible for addressing.

After the ACLU and Mr. Welch briefly cooperated in early 1999 to support a
preliminary injunction seeking to compel Parchman prison to provide more
services to inmates with HIV, the ACLU joined with class members in
December 1999 to seek Mr. Welch's removal.

The U.S. district court refused their motion. It instead granted Mr.
Welch's request and issued a "no-contact order" barring the ACLU from
contacting inmates regarding anything within his jurisdiction as class
counsel -- namely, Mississippi prison conditions.

In throwing out the lower court's ruling, the circuit panel ordered the
lower court to review its initial denial of $ 100,000 in ACLU attorney
fees.

"The prisoners are now going to be able to do what they've been trying to
do, which is to try and secure rights to humane and fair treatment," said
Margaret Winter, associate director of the National Prison Project. (The
National Law Journal, December 4, 2000)


INMATES LITIGATION: Suit Filed over St. Martin Hostage-Taking by Cubans
-----------------------------------------------------------------------
The sheriff and warden had sufficient warning, but failed to stop last
December's hostage-taking by Cubans being detailed at the St. Martin Parish
Jail, a group of eight former inmates claim in a federal lawsuit.

Warden Todd Louviere, a defendant in the suit, was one of the hostages. In
addition to Louviere, Sheriff Charles Fuselier and the U.S. Immigration and
Naturalization Service are named defendants in the suit filed Friday by
attorney Joslyn Alex.

The former inmates are asking for $75,000 each and for the suit to be
granted class-action status so it could include all of the 100 or so
inmates in the jail at the time of the incident.

On Dec. 13, five Cuban inmates, whom the INS was detaining for an
indefinite amount of time, took control of the prison. The inmates, who
were joined later by four others, took the jail warden and three guards
hostage using a sharpened metal stick and a screwdriver.

Five of the plaintiffs are women who were taken hostage a couple of days
into the five-day ordeal.

Officials should have noticed "warning signs" before the revolt, the suit
said.

"The detainees could be heard at night rumbling around in the ceiling
trying to escape," the suit alleged.

Before the incident, detainees had assaulted a guard, cut out a window in
one cellblock and cut through an iron ceiling in another cellblock, the
suit said.

The defendants failed to recognize "a facility on the blink (sic) of a
disturbance," the suit says. Inmates didn't alert guards, Pate said.

The suit was assigned to U.S. District Judge Rebecca Doherty.

Lafayette attorney Jim Pate, who represents the defendants, said Sheriff
Fuselier planned to deny the allegations in his formal response. (The
Associated Press State & Local Wire, December 7, 2000)


PASADENA UNIFIED: Parents Sue to Halt Student Activity Fees under CA Law
------------------------------------------------------------------------
Three parents filed a lawsuit in Los Angeles Superior Court suit against
the Pasadena Unified School District to stop the collection of student
activity fees.

The parents, who are seeking to recover funds students paid for
identification cards, athletic clothes and notebook organizers, claim the
fees violate the California Constitution.

The lawsuit states the fees violate the California Constitution's "free
education" clause and a 1984 state Supreme Court decision that outlawed
charges for extracurricular activities.

A lawsuit filed in May to hold California accountable for substandard
schools in minority neighborhoods is underway.

Filed by the American Civil Liberties Union, the lawsuit detailed
"appalling conditions" in which children were forced to learn, including
outdated textbooks, uncertified teachers and substandard school buildings.

The lawsuit, which lists 46 of the state's 8,500 schools, was assigned to
San Francisco Superior Court Judge Peter Busch.

The parents of a 12-year-old boy injured when a soccer goal post fell on
him filed a 1.5 million lawsuit against Maine-Endwell Central School
District in New York.

A soccer goal post at Maine-Endwell Middle School fell on Colin Wyatt in
November 1999 while the boy was playing touch football.

The lawsuit claims the school's equipment was improperly installed,
maintained and inspected.

A Florida public interest law firm has filed suit against 20 county school
boards for not providing an adequate education to jailed juveniles awaiting
trial as adults.

The suit was filed by the Florida Justice Institute in Alachua County
Circuit Court claiming the school boards are violating the teens' state
constitutional rights to a quality education.

A lawyer for the institute said up to 1,000 juveniles a day are jailed in
Florida as adults.

Schools in Virginia can no longer distribute brochures or other materials
that advocate the passage or defeat of school construction referendums or
any school board issue.

A new state law also prohibits schools from using students or teachers to
distribute campaign materials. Schools are also not allowed to distribute
materials about candidates.

Many Virginia school systems had policies in place, but the state passed a
law earlier this year that applies to all school systems.

A federal trial in Florida will get underway in December to determine
whether the Brevard County School Board violated federal and state laws by
not providing equal athletic facilities for boys and girls.

The class-action lawsuit is asking U.S. District Judge Anne Conway to force
the school district to build softball fields at Titusville and Astronaut
high schools.

Studies estimate that could cost 30,000 to 275,000 for each school. An
attorney for the school board said the district can't afford to build the
fields at this time.

The lawsuit was originally filed in 1997 by twins Jessica and Jennifer
Daniels, who complained the softball field was inferior to the baseball
field boys used at Merritt Island High School. The lawsuit later was
expanded to all of Brevard's 11 high schools. (Your School and the Law,
November 21, 2000)


PLC SYSTEMS: Announces Pending Settlement of Securities Suit in MA
------------------------------------------------------------------
PLC Systems Inc. (Amex: PLC), the leader in carbon dioxide (CO2)
transmyocardial revascularization (TMR), announced on December 6 that a
final settlement hearing will be held in the United States District Court
for the District of Massachusetts on February 7, 2001 to review a proposed
settlement related to the securities class action litigation against the
Company.

The principal financial terms of the proposed settlement agreement call for
payment to the plaintiffs, for the benefit of the class, of a total of $1.5
million. PLC Systems' insurance carriers will fund the entire $1.5 million
settlement.


PLC SYSTEMS: Summary Notice of Pendency of Class Action
----------------------------------------------------------------------
United States District Court District Of Massachusetts
In re: Civil Action No. 97-11737-RGS PLC SYSTEMS, INC. SECURITIES
LITIGATION
Summary Notice of Pendency of Class Action, Proposed Settlement, And
Settlement Hearing

TO:  ALL PERSONS WHO PURCHASED PLC SYSTEMS, INC. ("PLC") COMMON STOCK,
PURCHASED CALL OPTIONS ON PLC COMMON STOCK, OR SOLD (WROTE) PUT OPTIONS ON
PLC COMMON STOCK ON THE OPEN MARKET DURING THE PERIOD OF TIME BETWEEN
AUGUST 15, 1996 THROUGH JULY 25, 1997, INCLUSIVE (THE "CLASS").

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil
Procedure and an Order of the Court dated November 15, 2000, that the
above-captioned Action has been certified as a class action, and that a
Settlement for $1,500,000 has been proposed. A hearing will be held before
the Honorable Richard G. Stearns at the United States Courthouse, One
Courthouse Way, Boston, Massachusetts 02210, at 3:30 p.m., on February 7,
2001, to determine whether the proposed Settlement and Plan of Allocation
should be approved by the Court as fair, reasonable and adequate, and to
consider the application of Plaintiffs' counsel for attorneys' fees and
reimbursement of expenses.

IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHTS WILL BE
AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMENT FUND. If you
have not yet received the full printed Notice of Pendency of Class Action,
Proposed Settlement and Settlement Hearing, and a Proof of Claim form, you
may obtain copies of these documents by identifying yourself as a member of
the Class and by calling or writing to:

In re: PLC Systems, Inc. Securities Litigation
c/o Gilardi & Co. LLC
Claims Administrator
Post Office Box 990
Corte Madera, CA 94976-0990
Telephone 415-461-0410

Inquiries, other than requests for the forms of Notice and Proof of Claim,
may be made to Plaintiffs' Co-Lead Counsel:

Sanford P. Dumain, Esq      Sherrie R. Savett, Esq.
MILBERG WEISS BERSHAD       Berger & Montague, P.C.
HYNES & LERACH LLP           1622 Locust Street
One Pennsylvania Plaza      Philadelphia, PA 19103
New York, NY 10119           215-875-3000
212-594-5300

To participate in the Settlement, you must submit a Proof of Claim
postmarked no later than March 29, 2001. To exclude yourself from the Class
you must submit a request for exclusion postmarked no later than January
24, 2001. IF YOU ARE A CLASS MEMBER AND DO NOT EXCLUDE YOURSELF OR DO NOT
SUBMIT A PROPER PROOF OF CLAIM, YOU WILL NOT SHARE IN THE SETTLEMENT BUT
YOU WILL BE BOUND BY THE FINAL ORDER AND JUDGMENT OF THE COURT.

Further information may be obtained by directing your inquiry in writing to
the Claims Administrator.

Dated: December 6, 2000        By Order of The Court

Boston, Massachusetts          CLERK OF THE COURT

Source: Milberg Weiss Bershad Hynes & Lerach LLP

Contact: Kahtija Ali-Maisonet, 212-594-5300, for Milberg Weiss Bershad
Hynes & Lerach LLP


SCOTT HINKLEY: Trustee To Take Bids On Rare Sports Car
------------------------------------------------------
The trustee in a class-action lawsuit against financier Scott W. Hinkley
Sr. is taking bids on a rare sports car owned by the Oskaloosa man.

Bids start at $200,000.

The yellow Lamborghini Diablo is described as fully loaded, with a V-12
engine and hand-stitched leather interior.

"Among exotic cars, it's about as exotic as you can get," said Steve Will,
the Springfield, Mo., salesman who sold Hinkley the car in the fall of
1999. "It looks like it's going 200 mph just standing still."

Will, a salesman for Motor Cars International, said his boss likely will
bid on the rare Diablo, one of a handful in the United States. The car,
capable of going 208 mph, may be the fastest production car available in
America, he said.

Philip Schneider & Associates, the trustee in the suit against Hinkley,
announced this week it will take bids on the car until Dec. 15.

Philip Schneider of West Des Moines is appointed to protect the assets of
Hinkley's businesses on behalf of investors. Schneider has permission to
sell the car provided it fetches at least $200,000.

Proceeds will be held in an account containing roughly $540,000 from
Hinkley's Iowa and Missouri Rural Housing Inc. until the outcome of the
class-action lawsuit.

Hinkley, 52, was frequently seen driving the Lamborghini in Oskaloosa
before he fled this summer. He was arrested Oct. 20 in the Caribbean,
suspected by authorities of looting his real-estate investment companies.

Hinkley, a former Quaker minister, has pleaded innocent to money-laundering
and fraud charges. He remains in jail.

The Penny Wise Too, the $1.3 million yacht Hinkley bought with cash before
his getaway to the island of St. Maarten, has been seized by the U.S.
government pending a criminal trial, scheduled for April.

Peter Cannon, the Des Moines attorney representing 270 investors in the
lawsuit against Hinkley, also has moved to seize Hinkley's $67,000
Mercedes, his house and his wife's new Jaguar, among other assets.

A Mahaska County judge is expected to decide by next week whether to freeze
what remains of $205,000 Deanna Hinkley withdrew from a joint account days
after her husband fled. (The Associated Press State & Local Wire, December
7, 2000)


SOTHEBY’S: Berger & Montague Announces Proposed $70 Million Settlement
----------------------------------------------------------------------
The following was released on December 7 by Berger & Montague, P.C.
(http://www.investorprotect.com):

TO: All Persons and Entities Who Purchased Class A Limited Voting Common
Stock of Sotheby's Holdings, Inc. (NYSE: BID) During the Period February
11, 1997 through February 18, 2000, and Sustained a Loss Thereby (the
"Class").

YOU ARE HEREBY NOTIFIED that a hearing shall be held before the Hon. Denise
Cote, on February 16, 2001, at 2:00 pm in Courtroom 11B of the United
States District Court for the Southern District of New York, 500 Pearl
Street, New York, New York 10007, to determine whether an order should be
entered (i) finally approving the proposed $70 million settlement of the
claims asserted by plaintiffs in this consolidated action (the "Action"),
against defendants Sotheby's Holdings, Inc. and Sotheby's, Inc.
(collectively, "Sotheby's") and defendants William S. Sheridan, Joseph A.
Domonkos, Patricia A. Carberry, Cyndee L. Grillo and A. Alfred Taubman
(collectively with Sotheby's, the "Settling Defendants") on the terms set
forth in the Amended Stipulation and Agreement of Settlement dated as of
November 15, 2000 (the "Settlement"); (ii) dismissing the Action with
prejudice as to the Settling Defendants and as to defendant Diana D.
Brooks; (iii) finding that any shares of Sotheby's Class A Limited Voting
Common Stock to be issued in connection with the Settlement are exempted
securities under the Securities Act of 1933; (iv) approving the Plan of
Allocation of the Net Settlement Fund; and (v) awarding counsel fees and
reimbursement of expenses to counsel for Plaintiffs and the Class. This
Action was filed after reports in the press beginning on January 29, that
Sotheby's and its principal competitor, Christie's, Inc., participated in
an agreement regarding the amounts charged for commissions in connection
with auctions. This Action was filed to address claims under federal
securities laws stemming from declines in the market price of Sotheby's
Stock following those reports.

A more complete description of the Action, the proposed Settlement and the
steps Class Members must take in order to share in the proposed Settlement,
request exclusion from the Class or object to the Settlement and any
application for attorneys' fees and expenses appears in the Notice of
Proposed Settlement of Class Action, Settlement Fairness Hearing and Right
to Share in Settlement Fund (the "Notice"). The Notice also sets forth the
deadlines for exercising each of these options, including the March 10,
2001 deadline for mailing Proofs of Claim and the February 2, 2001 deadline
for requesting exclusion from the Class or filing any objections to the
proposed Settlement or any application for attorneys' fees and expenses.

If you have not yet received the Notice, which more completely describes
the terms of the proposed Settlement, your rights thereunder, and the steps
which must be taken before each applicable deadline, you may obtain a copy
by contacting: In re Sotheby's Holdings, Inc. Securities Litigation, c/o
Heffler, Radetich & Saitta, L.L.P., P. O. Box 160, Philadelphia, PA 19105-
0160, (215) 665-1124 or (800) 528-7199.

If you have any questions regarding this Action, you may contact
Plaintiffs' Lead Counsel: Sherrie R. Savett, Esquire, Gary E. Cantor,
Esquire, Berger & Montague, P.C. (http://www.investorprotect.com),1622
Locust Street, Philadelphia, PA 19103, (215) 875-3000.

Please do not contact the Court or the Clerk's Office for information.

Source: Berger & Montague, P.C.

Contact: Sherrie R. Savett, Esq., or Gary E. Cantor, Esq., or Nina Vernick
(Settlement Coordinator), all of Berger & Montague, P.C., 215-875-3000


SEMPRA ENERGY: Named in Lawsuit over Electric Prices in California
------------------------------------------------------------------
San Diego Gas & Electric Co reveals in its report filed with the SEC that
various news organizations have reported that a class action lawsuit has
been filed against a number of energy generating, marketing and trading
companies, including San Diego Gas & Electric’s subsidiaries Sempra Energy
Resources and Sempra Energy Trading. The lawsuit reportedly alleges
conspiracy and other anti-competitive conduct to raise wholesale electric
prices in the California market. We have not been served with the lawsuit,
but regard any allegations that our subsidiaries have engaged in unlawful
conduct to be without


ST. CLOUD: Settlement Reached in Gender University Discrimination Case
----------------------------------------------------------------------
Women who claimed they were paid less than men to teach at St. Cloud State
University agreed to a tentative settlement Thursday that would allow them
to recover $830,786 in a class-action lawsuit.

Under the settlement, endorsed by U.S. District Court Judge Donovan Frank,
the university would pay $600,000 in back wages to 250 women who were
faculty members between 1992 and 1998. Sixty women who are current faculty
also would be eligible for raises. All told, the university agreed to pay
$830,786.

Officials for the Minnesota State Colleges and Universities system
announced the settlement and described it as a way to avoid costly,
disruptive litigation. Only women on the St. Cloud campus are covered under
the agreement, although faculty on other campuses have made similar claims.

The pact is subject to approval by members of the affected class, who may
register their objections prior to Feb. 9. A final court hearing is set for
March 16.

In 1996, five women sued, alleging that they received smaller salaries then
their male counterparts. The case was expanded to include other St. Cloud
professors.

The settlement does not conclude whether wage discrimination took place,
and MnSCU maintains that none did.

"Although we disagree that women were paid less because of discrimination,
we are pleased to have this faculty dispute resolved," Gail Olson, MnSCU's
attorney, said in a news release. "We feel that it is in the university
community's best interest to have this matter settled.

Attorneys for the women did not immediately return a call from The
Associated Press.

The settlement also would require the university to provide information to
new faculty on how their salaries are determined.

St. Cloud State is one of 35 schools in the MnSCU system, which spans 53
campuses and serves about 140,000 students each semester. It is the result
of a merger of the state's universities and community and technical
colleges and does not include the University of Minnesota. (The Associated
Press State & Local Wire, December 7, 2000)


TENNESSEE: Supreme Court Finds State Abortion Laws Unconstitutional
-------------------------------------------------------------------
The Tennessee Supreme Court has ruled that several state abortion statutes
are unconstitutional because they are not narrowly tailored to further
compelling state interests. In a 4--1 decision, the high court overturned a
judgment declaring a physician-only counseling requirement and a second
trimester hospitalization requirement constitutionally valid. Planned
Parenthood of Middle Tenn. v. Sundquist. (Health Law Litigation Reporter,
October 2000)


TURKCELL ILETISIM: Milberg Weiss Announces Securities Suit Filed in NY
----------------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on December 5, 2000, on behalf of purchasers
of the securities of Turkcell Iletisim Hizmetler, A.S. (NYSE: TKC) between
their initial public offering on July 10, 2000 and September 21, 2000,
inclusive.

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/turkcell/

The action is pending in the United States District Court for the Southern
District of New York, located at 500 Pearl Street, New York, NY 10007,
against defendants Turkcell, Goldman Sachs International, Morgan Stanley
Dean Witter, Credit Suisse First Boston Int'l (Europe), Deutsche Bank AG
London, UBS AG, Cuneyt Turktan and Ekrem Tokay.

The complaint alleges that defendants violated Sections 11 and 15 of the
Securities Act of 1933, by issuing a materially false and misleading
Registration Statement and Prospectus. Specifically, the Registration
Statement and Prospectus, which offered American Depository Shares ("ADS")
to the public at $17.60 per ADS, were materially false and misleading
because they misrepresented the "churn" rate for Turkcell (the rate at
which Turkcell was losing customers) by a factor of at least 30. When the
truth was revealed, Turkcell ADSs fell to $9 5/16 each, representing a
significant loss from the IPO price.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G.
Schulman or Samuel H. Rudman 800/320-5081 turkcellcase@milbergNY.com
http://www.milberg.com


TURKCELL ILETISIM: Schiffrin & Barroway Files Securities Suit in NY
-------------------------------------------------------------------
According to an announcement of December 6 by Schiffrin & Barroway, LLP,
a class action lawsuit was filed in the United States District Court for
the Southern District of New York on behalf of all purchasers of the common
stock of Turkcell Iletisim Hizmetler, A.S. (NYSE: TKC) between their
initial public offering on July 10, 2000 and September 21, 2000, inclusive
(the "Class Period").

The complaint charges Turkcell Iletisim and certain of its officers and
directors with issuing a materially false and misleading Registration
Statement and Prospectus. Specifically, the complaint alleges that the
Registration Statement and Prospectus, which offered American Depository
Shares ("ADS") to the public at $17.60 per ADS, were materially false and
misleading because they misrepresented the churn rate for Turkcell (the
rate at which Turkcell was losing customers) by a factor of at least 30.
When the truth was revealed, Turkcell ADSs fell to $9-5/16 each.

Contact: Marc A. Topaz, Esq. or Robert B. Weiser, Esq., of Schiffrin &
Barroway, LLP, 888-299-7706 or 610-667-7706, or info@sbclasslaw.com


VOLKSWAGEN OF AMERICA: Fd Judge Upholds Charges on Malfunctioning Sensor
------------------------------------------------------------------------
A federal judge refused to dismiss a consumer class action brought by
owners of Audi A6s who say the cars are defective and can suddenly lose
control due to a fuel-system malfunction that allows them to run out of gas
unexpectedly.

In his seven-page opinion in McLaughlin v. Volkswagen of America, Senior
U.S. District Judge Thomas N. O'Neill Jr. found that the consumers have the
right to pursue their claims in federal court since each car owner easily
meets the minimum $ 75,000 in controversy.The ruling is a victory for
attorney David T. Shulick, a sole practitioner, Howard C. Gottlieb and
Jeffrey L. Kodroff of Spector Roseman & Kodroff, and David J. Gorberg of
Gorberg & Zuber.

In the suit, the car owners allege that Audi A6s manufactured since 1998
contain defective fuel-level sensors that cause the digital dashboard fuel
gauge to display the current fuel level falsely. As a result, the suit
says, the cars can suddenly run out of fuel, forcing drivers to lose
control without any warning.Audi admits that the car has its problems. In
May, the company voluntarily recalled 48,500 vehicles. But the suit says
the remedial measures taken by the manufacturer have sometimes been
ineffective.

The class of owners are pursuing claims under the Pennsylvania Unfair Trade
Practices and Consumer Protection Law as well as breach of contract and
negligent misrepresentation.Audi's lawyer, Matthew J. Hamilton of Pepper
Hamilton, moved to dismiss the suit for lack of subject matter
jurisdiction, arguing that in a federal diversity case, each individual
plaintiff must establish the $ 75,000 jurisdictional amount. The
plaintiffs' team argued that the UTPCPL allows for trebled damages and that
each plaintiff therefore meets the minimum since the Audi A6 has a base
price of about $ 50,000.

But Hamilton argued that the fuel-system defect was at most worth one-fifth
of the price, or $ 10,000, so that the trebled damages would be just $
30,000.

Judge O'Neill sided with the plaintiffs, saying there is a growing body of
case law in the Eastern District that says UTPCPL damages must be
calculated on the basis of the purchase price of the car.

Hamilton cited Dorian v. Bridgestone/Firestone, in which U.S. District
Judge Jay C. Waldman remanded a suit to state court after finding that the
damages for replacing defective tires should be limited to the costs of the
tires. But O'Neill found that Waldman's decision was easily distinguished
from all of the others since the defect in that case related to a discrete,
modular or incidental part of the vehicle. By contrast, O'Neill said, the
Audi A6 owners are complaining about a defect in "an integrated system that
is necessary to the safe operation of the vehicle." In such a case, O'Neill
said, "it is reasonable to assume that the baseline for damages is the
purchase price of the car."While Audi characterized the defect as "nothing
more than a malfunctioning fuel gauge," O'Neill said he sees the defect as
"more complicated than that." The fuel-level detection system, he said,
involves components inside the fuel tank as well as a fuel gauge and
computer. Making the matter even more complex, O'Neill said, is the
allegation that the manufacturer has been unable to fix the problem in some
cars even after multiple attempts. (The Legal Intelligencer, December 7,
2000)


WAR VICTIMS: Kajima Corp Agrees to Settle Damage Suit By Chinese Laborer
------------------------------------------------------------------------
Kajima Corp. agreed on Wednesday to settle a damage suit brought by Chinese
laborers who were forced to work in a mine in Akita Prefecture during World
War II operated by Kajima-gumi, the predecessor of Kajima Corp. Workers in
the Hanaoka mine staged an uprising on June 30, 1945, to rebel against the
torture they had been subjected to.

As a condition of the settlement, Kajima Corp. has agreed to contribute 500
million yen toward a fund for the forced laborers. This settlement is
unprecedented.

Laborers who were forced by the Imperial Japanese Army to work under harsh
conditions in the Philippines and Manchuria have also joined class action
lawsuits filed in the United States to extract compensation from Japanese
corporations. The settlement of the Hanaoka Incident will certainly have an
impact on the fate of these lawsuits.

Many of the people employed by Kajima Corp. had not heard of the Hanaoka
Incident. But the company cannot avoid blame for having refused to accept
responsibility for its behavior after the war had ended, and for trying to
cover up the incident. Needless to say, conveying the facts of history to
posterity is the first step that needs to be taken in order to resolve
problems from the past. (AP Worldstream, December 7, 2000)


* 3rd Circuit Offers New Interpretation Of Rule 10b-5 Requirement
-----------------------------------------------------------------
Byline: By Joseph M. McLaughlin, partner with Simpson, Thacher & Bartlett
in New York.

Sec. 10(b) of the Securities Ex-change Act of 1934 and Rule 10b-5 prohibit
misstatements or omissions of material fact made with scienter "in
connection with" the purchase or sale of a security. The cases interpreting
the "in connection with" requirement illustrate the difficulty of
extracting substantive principles from a prepositional phrase.

Because "in connection with" suggests no fixed and precise meaning, courts
have sought to define the requisite nexus between alleged
misrepresentations and the decision to purchase or sell a security in a
manner that provides certainty, yet preserves flexibility to meet unusual
circumstances. See, e.g., Superintendent of Ins. v. Bankers Life & Cas.
Co., 404 U.S. 6, 11-12 (1971).

In Semerenko v. Cendant Corp., 216 F.3d 315 (3d Cir. 2000), the Third
Circuit recently dispelled much of the confusion in its jurisdiction, but
other courts continue to employ varying approaches in evaluating whether
the nexus be-tween alleged fraudulent conduct and the trading of securities
is sufficient to trigger liability. This article reviews the expansive
interpretation of Rule 10b-5 adopted by the Third Circuit, and compares it
with the approaches of other federal courts.

In Semerenko, a purported class of purchasers of American Bankers Insurance
Group Inc. (ABI) common stock alleged securities fraud against Cendant
Corp., certain of Cendant's former directors and officers and its outside
accountant. Plaintiffs had not purchased Cendant stock, and did not allege
that any of the defendants made a material misstatemement or omission about
the value of any ABI security. Rather, plaintiffs contended that during the
pendency of a tender offer by Cendant for the outstanding shares of ABI,
defendants made material misrepresentations concerning Cendant's financial
condition and its willingness to complete the proposed tender offer and
subsequent merger. The alleged misrepresentations were contained in public
statements by Cendant and its directors and officers after the announcement
of the ABI tender offer, and concerned the nature and extent of accounting
irregularities that prompted multiple restatements of Cendant's earnings.

Amid its disclosures concerning the accounting irregularities, Cen-dant
issued several public statements affirming its commitment to the tender
offer. The successive disclosures about Cendant's accounting problems
eroded the price boost ABI's stock enjoyed after announcement of the merger
agreement with Cendant, culminating in a precipitous decline when Cendant
and ABI announced the termination of the merger agreement. Id. at 319-22.

The district court dismissed plaintiffs' securities fraud claims on
multiple grounds, including that the alleged misrepresentations were not
made "in connection with" any purported class member's purchase of ABI
stock.1 The Third Circuit reversed.

Reviewing its prior cases addressing the "in connection with" re-quirement,
the Third Circuit distilled two principles: (1) the phrase requires a
causal connection between the alleged fraud and the relevant securities
transaction, and (2) the misrepresentations need not refer to a particular
security. Positing a need for a standard that recognizes the "realistic
causal effect that material misrepresentations, which raise the public's
interest in particular securities, tend to have on the investment decisions
of market participants who trade in those securities," the court held that
if the alleged misrepresentations are material, "the 'in connection with'
requirement may be satisfied simply by showing that they were publicly
disseminated in a medium upon which investors tend to rely." It is
irrelevant, according to the Third Circuit, that the alleged
misrepresentations were not intended to influence the investment de-cisions
of market participants. The court remanded the case to the district court
for further proceedings concerning materiality and public dissemination,
cautioning that materiality (which in a fraud on the market case generally
equates with information that alters a stock's price) typically poses a
mixed question of law and fact seldom suitable for summary disposition.

                       Investment Value Approach

The Third Circuit's expansive inter-pretation of "in connection with"
contrasts with the "investment value" approach adopted by many courts,
including the Fourth and Seventh Circuits (and the Second Circuit in
nonfraud-on-the-market cases). See Gurwara v. Lyphomod Inc., 937 F.2d 380
(7th Cir. 1991); Head v. Head, 759 F.2d 1172 (4th Cir. 1985).

The investment value approach precludes liability unless a misleading
statement relates to the value of the relevant security or the
consideration offered for the security. Requiring a meaningful connection
between a securities transaction and allegedly fraudulent conduct, this
standard ensures that liability will not attach merely because securities
are incidentally involved in an allegedly fraudulent transaction.

For example, regardless of available state law claims, it would not be
securities fraud if a company's executives induced someone to accept
employment by promising, with no intention of performing, that the employee
would receive stock in the company. Rather, the "investment value" approach
captures statements addressing the perceived value of the security,
including the investment characteristics of the security itself, the
viability or quality of the issuer and its goods or services, and other
attributes of ownership that would induce a reasonable investor to buy or
sell the security. See Miller v. Asensio, 101 F. Supp.2d 395, 400-01 (D.S.C
2000); Production Resource Group, L.L.C. v. Stonebridge Part-ners Equity
Fund, L.P., 6 F. Supp.2d 236, 240 ( S.D.N.Y. 1998); Alex, Brown & Sons Inc.
v. Marine Mid-land Banks Inc., 1997 WL 97837, *5 (S.D.N.Y. 1997); Press v.
Chemical Inv. Servs. Corp., 988 F. Supp. 375, 389 (S.D.N.Y. 1997).

This approach reflects the purpose of Rule 10b-5: "to make sure that buyers
of securities get what they think they are getting and that sellers of
securities are not tricked into parting with something for a price known to
the buyer to be inadequate or for a consideration known to the buyer not to
be what it purports to be." Chemical Bank v. Arthur Andersen & Co., 726
F.2d 930 (2d Cir.), cert. denied, 469 U.S. 884 (1984).

                        Second Circuit Approach

A South Carolina federal court, recently canvassing Second Circuit law,
suggested that the district courts in the circuit are inconsistently
interpreting "in connection with." Miller, 101 F. Supp.2d at 400 n.6. The
confusion stems from the different approaches the Second Circuit has
endorsed in cases in-volving (a) face-to-face representations and (b)
public statements allegedly absorbed into an efficient market for actively
traded securities.

Courts in the Second Circuit generally have enforced the "investment value"
approach in cases alleging securities fraud arising out of essentially
face-to-face transactions. For example, courts have dismissed for failure
to allege sufficient nexus between misrepresentation and securities
transaction Rule 10b-5 claims alleging that (a) a brokerage house
fraudulently in-duced its customer to liquidate his stock portfolio for
reinvestment purposes; (b) defendant failed to convey the proceeds of a
securities transaction when due; and (c) de-fendant's directors negotiated
for the sale of all their company's shares with no intention of concluding
an agreement. See Saxe v. E.F. Hutton & Co. Inc., 789 F.2d 105 (2d Cir.
1986); Press, 988 F. Supp. at 388-89; Production Resource Group, 6 F.
Supp.2d at 239-40.

While misrepresentations were alleged in each of these face-to-face
transactions, they did not pertain to the merit or value of the security at
issue and thus were not actionable under Rule 10b-5.

In fraud-on-the-market cases, the Second Circuit interprets "in connection
with" more expansively. If open market purchases or sales are made
allegedly in reliance on public misstatements or omissions that could
affect the company's stock price, the Second Circuit subsumes the "in
connection with" inquiry into the materiality standard. Accordingly, if the
alleged misleading information is of a sort that a reasonable investor
would rely on in deciding to buy or sell a security, the requisite
connection between the alleged fraud and the securities transaction is
present. See, e.g., In re Ames Dep't Stores Inc. Stock Litig., 991 F.2d 953
(2d Cir. 1993); In re the Leslie Fay Co.'s Inc., 871 F. Supp. 686 (S.D.N.Y.
1995).

This "effect on the market" test casts a wide net, particularly at the
pleading stage. Courts in the Second Circuit have sustained claims in
fraud-on-the-market cases if a reasonable investor might have considered
the statement in evaluating a company's prospects, even if the statement
was not directed at investors. Thus, class action claims have proceeded
based on an array of publicly available information, from statements
directed at shareholders contained in quarterly and annual public filings
and press releases, to purely technical product information published in a
trade journal, because of the breadth of information consulted by financial
analysts. See id.; see also In re Carter-Wallace Inc. Sec. Litig., 150 F.3d
153, 156-57 (2d Cir. 1998).

After the pleading stage, in order to avoid dismissal, plaintiffs must
present credible evidence that any allegedly misleading statement was
actually consulted and used by market professionals in evaluating the stock
of the company.

Asserting a successful threshold challenge to a class action complaint's
"in connection with" allegations will be difficult under Semer-enko's
materiality plus public dissemination in a reliable medium standard, or the
Second Circuit's subtantially similar approach in fraud-on-the-market
cases. The growing number of cases sustaining claims based on alleged
misstatments connected to a securities transaction only by assumption
propped up by inference warrants judicial reconsideration of the Semerenko
standard. Moreover, the textual basis of the standard is questionable, as
it essentially subsumes an element of the 10b-5 claim into the distinct
materiality inquiry.

In contrast, the investment value approach has the virtue of reasonably
distinct landmarks fixing the boundaries of liability--the requisite
connection is only present when plaintiff alleges and proves it purchased
or sold a security in reliance on a misrepresentation as to its value or
merit.

In the meantime, the minimal nexus required in fraud-on-the-market cases
underscores the importance of meticulous care and investigation attending
the preparation and issuance of any public statements made by directors and
officers, whether in press releases, letters to shareholders, quarterly and
annual reports or any other public medium.

Citing a "plethora of intermediate steps" between Cendant's alleged
misrepresentations about its financial condition and plaintiffs' purchase
of allegedly inflated ABI stock, including the effect on the price of ABI
stock of an earlier, competing offer to purchase ABI and the conditional
nature of the Cendant merger agreement, the district court deemed the
connection between the alleged misrepresentations and the plaintiffs'
investment too tenuous to support a claim. P. Schoenfeld Assset M'gt LLC v.
Cendant Corp., 47 F. Supp.2d 546, 554 (D.N.J. 1999), rev'd, 216 F.3d 315
(2000). (The Corporate Counsellor, November 2000)


* Reexamining Corporate Disclosure Practices By National Union VP
-----------------------------------------------------------------
BYLINE: Paul A. Ferrillo is vice president and associate general counsel of
National Union Fire Insurance Company of Pittsburgh, a wholly owned
subsidiary of the American International Group Inc. The opinions expressed
in this article are his own. The author thanks Michael K. Rappaport, Esq.
for his assistance in the preparation of this article.

O* Oct. 23, the U.S. Securities and Exchange Commission's Regulation FD
(for Fair Disclosure) went into effect. This new rule is designed to halt
the practice of selective disclosure, a practice by which companies release
material nonpublic information to selected insiders (typically market
analysts or big investors) before disclosing that information to the
general public.1 SEC Chairman Arthur Levitt has previously condemned the
practice, noting "[t]he behind-the-scenes feeding of material nonpublic
information from companies to analysts is a stain on our markets."2

Although Regulation FD expressly states that it does not create an
additional area of potential liability for fraud, the rule will compel
certain changes in how companies deal with analysts in order to comply with
the provisions of Regulation FD. More important, 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 new Regulation FD, its potential relationship to traditional
areas of liability involving analyst communications and will conclude by
offering some practical advice when dealing with analysts in the future so
as to comply with the provisions of Rule FD.

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 the corporation's 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 practice.

So then, what's the problem? Well, the company's stock price can move
dramatically based on this selective disclosure of material information,
benefiting some investors (typically large ones who 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 CEO's and investors that his company would be announcing
favorable quarterly earnings estimates. The stock gained about 6 percent
that day.

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.

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.3

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
whom the analyst works) who are able to trade on the information before it
is disseminated to the market.4

Obviously, the small investor is tremendously disadvantaged because he or
she simply will not have the same access to material nonpublic information
as those "in the know." Inevitably, the practice of selective disclosure
drew the ire of Chairman Levitt. In a speech at the Economic Club of New
York in November 1999, Chairman Levitt 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 Nos. 33-7787 and 34-42259). After a lengthy
comment period, on Aug. 10, 2000, the Com-mission approved Regulation FD in
a somewhat modified form (Release No. 33-7881 and 34-43154), which narrowed
its proposed application "only to communications to securities market
professionals...."

Here's what Rule 100 of Regula-tion FD provides. Whenever a company/issuer,
or one who acts on its behalf, intentionally discloses material nonpublic
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). It's important to remember that a failure to comply with the
provisions of Reg-ulation FD will not, in and of itself, create any
additional private right of action under 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, to which class of individuals "outside" the company is
Regulation FD 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, 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
information.

Who Is Exempted?

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.

Second, to whom within the company/issuer does Regulation FD apply?
Regulation FD applies 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.

Third, if a company makes a selective disclosure of material nonpublic
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, nonexclusionary distribution of information to
the public." So, 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 site to discharge their disclosure obligations
to the public? Not yet. How-ever, 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 Regu-lation
FD's disclosure requirements.

Fourth, does Regulation FD provide any definition within as to what is
"material, nonpublic 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 SEC decided not to provide a brightline
definition, instead relying on the time-tested definition of materiality:
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."5

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 nonpublic information is 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:

* earnings information;

* mergers, acquisitions or tender offers,

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

* changes in control or management,

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

* 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

* bankruptcies or receiverships.

While the above list is illustrative, the lack of a brightline 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 Regulation FD,
and have potential implications in a securities class action? Though Rule
102 of Regulation FD is clear in that a violation of FD will not create an
additional area of liability of Rule 10b-5 of the Exchange Act, the answers
to both of the above questions is, unfortunately, "maybe."

                               How to Do It

Certainly, the practice of providing guidance to the market will not end
with the adoption of Regulation FD. It will now just be a matter of "how to
do it." If your "guidance" will include material nonpublic 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, nonpublic information will run afoul of Reg-ulation FD.
Regulation FD demands broad disclosure, not selective disclosure.6

Similarly, merely reviewing draft analyst reports for pure factual errors
is probably OK. Presumably, no material nonpublic information would be
changing hands. However, either by commenting on, or urging changes be made
to, analyst reports, there is certainly some risk that material, nonpublic
information will change hands in a manner that 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 they could be held
responsible for its contents under the "entanglement" theory of liability.
See Elkind v. Liggett & Myers Inc., 635 F. 2d 156 (2d Cir. 1980).

Under this traditional theory of liability under Rule 10b-5 (a theory long
preexisting Regulation FD), by taking part of 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 re-spect,
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.7

Regulation FD is here to stay. Make sure 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.

    (1) 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.

    (2) "Quality Information: The Lifeblood of Our Markets," Remarks by
Chairman Levitt at the Economic Club of New York, Oct. 18, 1999.

    (3) 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.

    (4) Frankel, et. al., "An Empirical Examination of Conference Calls as
a Voluntary Disclosure Medium," J. Acct. Res. 133 (Spring 1999).

    (5) TSC Industries Inc. v. Northway Inc., 426 U.S. 438, 449 (1976).

    (6) 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.

    (7) The other traditional area of liability involving communications
with analysts deals with "adoption." Adoption is a theory of liability 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.

    (8) See generally, David, "New SEC Regulations Address Selective
Disclosure and Clarify Insider Trading Standards," (Alston & Bird
Securities Advisory, August 2000). (Article published in The Corporate
Counsellor, November 2000)


                             *********


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