/raid1/www/Hosts/bankrupt/CAR_Public/010905.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, September 5, 2001, Vol. 3, No. 173
Headlines
AMF BOWLING: Will Mount Vigorous Defense Against Suit In S.D. NY
CHICAGO TRANSIT: Sued By Chicago Native For "Fraudulent" Fare Cards
CVS CORPORATION: Schiffrin Barroway Initiates Securities Suit in MA
DRYVIT SYSTEMS: EIF Litigation Will Not Affect Operations
ECI TELECOMS: Sued By Shareholders In Securities Suit in VA
FLORIDA: Inmates Initiate Suit Over Removal of Typewriters And Books
INTERNATIONAL RECTIFIER: Reaches Tentative Settlement Of 1991 Suits
KANA SOFTWARE: Johnson Perkinson Files Securities Suit in S.D. NY
LOCKHEED MARTIN: Hearing On Future Of Red Light Camera System Set
MEDIAPLEX INC: Officials Face Three Securities Suits In S.D. NY
MICROTUNE INC: Plans To File Dismissal Motions v. NY Securities Suits
NEW YORK CITY: Suit Alleges Council Failed To Create Promised Jobs
PEPSICO INC: Settles Lawsuit From Snapple Acquisition In N.D. IL
PRUDENTIAL HOME: Faces Securities Suit In Superior Court of New Jersey
RAMBUS INC.: Cohen Milstein Initiates Securities Suit In N.D. CA
RENT-WAY: District Court Consolidates Securities Suits In W.D. PA
RICHARDSON ELECTRONICS: Faces Anti-Trust Lawsuit In N.D. Illinois
SBARRO INC: Employees Motion To Certify Lawsuit Denied In California
STORAGE NETWORKS: Wolf Haldenstein Initiates Suit In S.D. NY
THQ INC: Pending Lawsuit Could Prove Harmful To Business
USA NETWORKS: Faces Complaint by Stockholders Filed in S.D. NY
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AMF BOWLING: Will Mount Vigorous Defense Against Suit In S.D. NY
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AMF Bowling Worldwide faces a putative class action suit filed against
them by Vulcan International Corporation in the United States District
Court for the Southern District of New York.
Also named as defendants in the suit are the following:
(1) The Goldman Sachs Group, L.P.,
(2) Goldman, Sachs & Co.,
(3) Morgan Stanley & Co. Incorporated,
(4) Cowen & Company,
(5) Schroder & Co., Inc.,
(6) Richard A. Friedman and
(7) Douglas J. Stanard.
The complaint has subsequently been amended to include those who
purchased common stock in the Company's initial public offering.
The suit alleges that AMF Bowling Worldwide made allegedly inaccurate
and misleading disclosures in connection with their initial public
offering.
In a disclosure to the Securities and Exchange Commission, AMF
management avers that the litigation is without merit and that they
intend to vigorously defend against it.
AMF Bowling is the largest bowling operator who also sells athletic
goods, owns Michael Jordan Golf (which operates two practice ranges)
and makes billiard tables under the brands Highland, Renaissance, and
PlayMaster.
CHICAGO TRANSIT: Sued By Chicago Native For "Fraudulent" Fare Cards
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The Chicago Transit Authority faced a complaint filed by Lakeview
resident Eric Fenlon Thursday in Cook County Circuit Court.
The case charges the agency of fraud and deception for stamping
expiration dates on fare cards and refusing to issue refunds for unused
fares once the cards become invalid.
Eric Fenlon, 28, said he rides CTA trains to his job in customer
service downtown.
The suit, filed as a proposed class-action complaint, was brought on
behalf of CTA customers who use the plastic fare cards, which have
magnetic strips that can store up to $100 worth of bus and train rides.
The back of each fare card contains an expiration date that is one year
to 14 months after the purchase date of the card.
The CTA's fare card automated vending machines are programmed to swap a
card nearing the expiration date for a new card that is valid for at
least another year when the cardholder adds as little as 5 cents of
value to the old card.
CVS CORPORATION: Schiffrin Barroway Initiates Securities Suit in MA
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Schiffrin and Barroway, LLP commenced a class action lawsuit in the
United States District Court for the District of Massachusetts, against
CVS Corporation.
The case was filed on behalf of all purchasers of the common stock of
CVS Corporation (NYSE:CVS) from February 6, 2001 through June 27, 2001,
inclusive.
The complaint charges CVS and certain of its officers and directors
with issuing false and misleading statements regarding its business and
financial condition.
Specifically, the complaint alleges that CVS issued positive
statements concerning its business and operations which failed to
disclose:
(1) that the Company was unable to successfully address the
national shortage of pharmacists and that this shortage was
negatively impacting CVS' business and
(2) that the Company's expansion plans would have to be scaled
back in light of the difficulties facing the Company.
When this information became publicly known on June 27, 2001, the price
of CVS common stock dropped sharply, falling from $44.10 per share to
$36.51 per share on extremely heavy trading volume.
CVS insiders were able to dispose of shares of their personally-held
stock for gross proceeds in excess of $8 million and CVS was able to
raise $300 million through the issuance of notes on highly favorable
terms.
For further details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-
888-299-7706 (toll-free) or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com.
DRYVIT SYSTEMS: EIF Litigation Will Not Affect Operations
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Dryvit Systems, Inc. is facing various class action suits involving
houses clad with their exterior insulated finish (EIF) products.
Majority of Dryvit's EIF lawsuits involve claims of water intrusion
into structures and related property damages
Dryvit was named in an attempted class action filed in the U.S.
District Court for the Eastern District of North Carolina involving an
EIFS-type product known as Fastrak System 4000.
On December 18, 2000, the U.S. District Court certified a class of
"homes, condominiums, apartment complexes or commercial buildings which
have been constructed after January 1, 1992, using an exterior cladding
system knows as Fastrak System 4000."
On June 26, 2001, the 4th Circuit U.S. Court of Appeals vacated the
District Court's class certification order ruling that certification
was not appropriate because it is likely that individual issues
necessary to adjudicate Dryvit's liability will predominate over class
issues.
The Court of Appeals has remanded the case to the District Court for
further proceedings.
Last December 1, 2000, Dryvit was named along with other defendants in
a state class action filed in Jefferson County, Tennessee.
The above case seeks various types of damages on behalf of persons who
paid for the purchase of a Dryvit EIFS-clad structure during the period
beginning November 14, 1990 to the date of the Complaint.
Last May 30, 2000, Dryvit was named along with other third party
defendants in a similar state class action filed in Madison County,
Illinois.
Last March 22, 2001, Dryvit was again named along with other defendants
in a another similar state class action complaint filed in Mobile
County, Alabama
The company maintains, however, that EIFS litigation will not have a
material adverse effect on the Company's consolidated financial
position or results of operations.
ECI TELECOMS: Sued By Shareholders In Securities Suit in VA
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ECI Telecoms faces a claim filed on June 13, 2001 in the name of
various shareholders in the Company in the Federal Court of the State
of Virginia.
The complaint named ECI, the Chairman of the Board, the CEO
and its previous VP Finance as its defendants.
The plaintiffs have requested that the Court recognize it as a class
action in the name of all shareholders who acquired shares of ECI
between the dates May 2, 2000 and February 14, 2001
The case alleges that ECI deceived their shareholders, presented
incorrect presentations and published misleading financial statements,
which caused damage to the shareholders.
Pursuant to US law, additional plaintiffs can file additional
claims, up until the 13 August, 2001, and request from the Court
to nominate the lead plaintiff and lead plaintiff's counsel.
ECI expects the US Court will consolidate all the various claims
into one claim, which will be filed with the US Court after
appointment of the lead plaintiff and the lead plaintiff's
counsel.
FLORIDA: Inmates Initiate Suit Over Removal of Typewriters And Books
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Four inmates sued the State of Florida Friday, alleging the Department
of Corrections violated prisoners' rights by removing typewriters and
law books from prison libraries last May in an effort to save money.
The suit was filed in circuit court on behalf of four prisoners at Avon
Park Correctional Institution. It seeks class-action status.
The lawsuit argues that removing the items violates the state
constitutional provisions that promise citizens - including prison
inmates - equal access to courts and full benefit of laws.
The Department of Corrections referred questions to Attorney General
Bob Butterworth, whose spokeswoman said the office couldn't comment on
active litigation.
Earlier this summer, Allen Overstreet, who oversees library services
for the department, said half of the prison law libraries in Florida
haven't had typewriters for several years.
Removing equipment from the others will save $50,000 annually in
maintenance and supply costs, he said.
INTERNATIONAL RECTIFIER: Reaches Tentative Settlement Of 1991 Suits
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Semiconductor maker International Rectifier Corp. (NYSE:IRF) said it
agreed Thursday in principle to settle, without payment, class action
lawsuits brought against the firm in 1991.
The three federal suits, filed in California, sought damages for
alleged securities violations in connection with International
Rectifier's public offering.
In a filing with the Securities and Exchange Commission, the firm said
that the settlement contemplates the dismissal of all claims without
any payments.
A federal court must approve the settlement, the details of which were
not disclosed.
The El Segundo, California-based firm makes semiconductors that
regulate electricity flows. Its stock closed down 48 cents to $35.62 on
the Nasdaq, having traded in a 52-week range of $27.38 to $69.50.
KANA SOFTWARE: Johnson Perkinson Files Securities Suit in S.D. NY
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Johnson & Perkinson filed a class action lawsuit on August 29, 2001 on
behalf of purchasers of the securities of Kana Software, Inc. (NASDAQ:
KANA) between September 21, 1999 and December 6, 2000 inclusive.
The action also named the following as defendants:
(1) Goldman Sachs & Co.,
(2) Lehman Brothers Inc.,
(3) Michael J. McCloskey,
(4) Joseph D. McCarthy and
(5) Mark S. Gainey,
The lawsuit is pending in the United States District Court, Southern
District of New York.
The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder.
On or about September 21, 1999, Kana (then called Kana Communications
Inc.) commenced an initial public offering of 3,300,000 of its shares
of its common stock at an offering price of $15 per share.
In connection therewith, Kana filed a registration statement, which
incorporated a prospectus (the "Prospectus"), with the SEC.
The complaint further alleges that the Prospectus was materially false
and misleading because it failed to disclose, among other things, that:
(i) the Underwriter Defendants had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which the Underwriter Defendants allocated to
those investors material portions of the restricted number of
Kana shares issued in connection with the Kana IPO; and
(ii) the Underwriter Defendants had entered into agreements with
customers whereby they agreed to allocate Kana shares to those
customers in the Kana IPO in exchange for which the customers
agreed to purchase additional Kana shares in the aftermarket
at pre-determined prices.
For more information, contact Dennis J. Johnson or Jacob B. Perkinson
by Mail: 1690 Williston Road, South Burlington, Vermont 05403 by Phone:
1-888-459-7855 (toll-free) or by E-mail: JPLAW@adelphia.net
LOCKHEED MARTIN: Hearing On Future Of Red Light Camera System Set
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City prosecutors will argue before Superior Court Judge Ronald Styn
Tuesday on whether evidence obtained from San Diego's red light camera
system should be allowed at upcoming trials.
The hearing arose from a class-action lawsuit filed on behalf of all
individuals issued citations as a result of the city of San Diego's
red-light enforcement camera program.
The system has already mailed out tickets to 150,000 drivers whose cars
were photographed running stoplights.
The suit, filed Thursday in San Diego Superior Court, names as
defendants, among others, the operator of the program, Lockheed Martin,
and the city of San Diego.
Four groups of plaintiffs are seeking damages claiming that:
(1) Lockheed Martin was illegally allowed to run the red-light
camera program.
(2) Citations were issued to car owners even though photographs
showed the owner was not driving the vehicle.
(3) Lockheed Martin had an illegal financial incentive by taking a
$70 share for each $271 ticket.
(4) The city of San Diego's "lack of oversight" renders evidence
gathered by the red-light cameras "untrustworthy."
Superior Court Judge Ronald Styn has already issued an opinion saying
that evidence from the red light camera system is unreliable and
untrustworthy.
In July, U.S. House Republicans criticized the use of cameras to catch
motorists who run stop lights, saying they amounted to Big Brother-type
surveillance, with the potential for abuse as a revenue-raising tool.
An attorney representing the plaintiffs says the system is biased.
Doug Gilliland believes that the ". program was extremely profitable
for the city and Lockheed Martin. In the short 18-months that they ran
the program, they generated $33 million (that) they cut up and divided
amongst themselves."
City Attorney Casey Gwinn believes that the suit was without merit and
is confident that a court will not find factual basis for the
allegations.
San Diego police officials said that the red-light cameras increase
safety at city intersections because officers can't patrol every
intersection.
All 19 red-light cameras in the city of San Diego have been turned off
pending the completion of an inspection of the entire system.
MEDIAPLEX INC: Officials Face Three Securities Suits In S.D. NY
---------------------------------------------------------------
Three putative class action lawsuits were filed in the United States
District Court for the Southern District of New Yorker in July and
August 2001 against Mediaplex, Inc.
The suits were commenced on behalf of all persons who acquired
Mediaplex securities between November 19, 1999 and December 6, 2000.
Also named as individual defendants in the suits were the following:
(1) Gregory Raifman,
(2) Sandra Abbott,
(3) Jon Edwards,
(4) Lawrence Lenihan,
(5) Peter Sealy,
(6) James Desorrento, and
(7) A. Brooke Seawell
The above-mentioned parties are current or former officers and
directors of Mediaplex.
The complaint alleges that defendants violated the Securities Act of
1933 and the Securities Exchange Act of 1934 by issuing a prospectus
that contained "materially false and misleading information."
It alleges that the prospectus was false and misleading because:
(i) it failed to disclose the underwriter defendants' purported
agreement with investors to provide them with unspecified
amounts of Mediaplex shares in the initial public offering in
exchange for undisclosed commissions; and
(ii) the purported agreement between the underwriter defendants and
certain of their customers whereby the underwriter defendants
would allocate shares in Mediaplex's initial public offering
to those customers in exchange for the customers' agreement to
purchase Mediaplex shares in the after-market at pre-
determined prices.
MICROTUNE INC: Plans To File Dismissal Motions v. NY Securities Suits
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Microtune, Inc. vowed to vigorously defend against multiple purported
securities fraud class action lawsuits filed in the United States
District Court for the Southern District of New York.
The lawsuits are being brought on behalf of all persons who purchased
Microtune common stock from August 4, 2000 through December 6, 2000.
The complaints allege liability under Sections 11 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, on the grounds that the registration statement
for the Company's initial public offering did not disclose that:
(1) the underwriters had agreed to allow certain of their
customers to purchase shares in the offering in exchange for
excess commissions paid to the underwriters; and
(2) the underwriters had arranged for certain of their customers
to purchase additional shares in the aftermarket at pre-
determined prices.
The company believes that the cases are subject to the Private
Securities Litigation Reform Act of 1995, and expects that the cases
will be consolidated into a single action.
The company labeled the above allegations "without merit" and expects
that motions to dismiss these cases will be filed
NEW YORK CITY: Suit Alleges Council Failed To Create Promised Jobs
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Welfare advocacy groups and several people on welfare recently filed a
class-action lawsuit against New York City in State Supreme Court in
Manhattan, accusing the city of failing to create the 2,500 subsidized
jobs for welfare recipients this year. The City Council was to enact a
jobs program, according to a recent report in The New York Times.
The jobs program directed the city to create 7,500 jobs over three
years for people on welfare.
The jobs were to last six months, pay above the minimum wage and
provide education, training and other benefits.
"We want to send a message," said Gail Aska of Community Voices Heard,
one of the advocacy groups bringing the lawsuit on behalf of the people
on welfare. "We want the next mayor to understand that we won't take
this kind of nonsense; that if there's a law in place, everyone who
takes the oath of office to be mayor has to implement that law."
Along with the five welfare recipients named plaintiffs in the civil
suit is the Fifth Avenue Committee, another advocacy group, which is
based in Brooklyn.
The plaintiffs say they already have collected 2,500 applications from
welfare recipients for the contested jobs and have presented them to
various city agencies.
City officials argue that they do not intend to comply with the job
program enacted by the City Council, because the Council does not have
the power to create welfare programs.
The city has 30 days to respond to the action.
PEPSICO INC: Settles Lawsuit From Snapple Acquisition In N.D. IL
-----------------------------------------------------------------
Pepsico Inc has settled a purported class action filed in the United
States District Court for the Northern District of Illinois.
The lawsuit arose out of the Company's acquisition of Snapple Beverage
Corporation, and was brought on behalf of purchasers of the Company's
common stock during the period between August 4, 1994 and November 1,
1994.
Pursuant to the Settlement Agreement, the class will receive $9.9
million plus the payment of $500,000 of costs associated with that
payment.
This settlement is subject to a fairness hearing and final approval
by the court.
The settlement is covered by insurance and a reserve.
PRUDENTIAL HOME: Faces Securities Suit In Superior Court of New Jersey
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The Capitol Life Insurance Company filed an individual and purported
class action against Prudential Home Mortgage Company, Inc. in the
Superior Court of New Jersey.
The case also named Prudential Home Mortgage Securities Company, Inc.
("PHMSC"), certain of their affiliates and 100 unnamed persons as
defendants.
Last March 26, 1997, PHMC and others filed a motion to dismiss the
complaint for failure to state a claim on which relief can be granted.
On June 2, 1997, plaintiff filed an amended complaint, with the
following additional plaintiffs:
(1) American Investors Life Insurance Company
(2) Merrill Lynch & Co.,
(3) Kidder, Peabody & Co. Incorporated,
(4) Lehman Brothers Inc. and
(5) Salomon Brothers Inc.
The complaint alleges, among other things, that the defendants made
false and misleading statements and/or omissions of material fact and
fraudulently concealed material facts in connection with the purchase
by the plaintiffs of certain of PHMSC's Subordinated Mortgage
Securities, Series 1992-A.
The company says it will vigorously defend this action.
PHMC does not believe that this litigation will have an adverse effect
on their business operations.
RAMBUS INC.: Cohen Milstein Initiates Securities Suit In N.D. CA
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Cohen, Milstein, Hausfeld & Toll, P.L.L.C. filed a lawsuit late last
week in the United States District Court for the Northern District of
California, on behalf of purchasers of Rambus, Inc.(Nasdaq:RMBS) during
the period of January 18, 2000 through and including May 9, 2001.
The complaint charges Rambus and certain of its officers and directors
with violations of of the Securities Exchange Act of 1934.
The complaint alleges that defendants misrepresented the operations and
business of Rambus during the Class Period, while failing to disclose,
among other materially adverse facts, that:
(1) Rambus has engaged in fraudulent activity in order to obtain
purportedly valuable patents on SDRAM computer memory and
memory related technologies;
(2) the true enforceability and viability of these patents and the
true risks involved with investing in Rambus stock during the
Class Period;
(3) the effects these adverse undisclosed actions were having and
would continue to have on Rambus's growth and earnings
prospects; and
(4) that Rambus insiders, sold or otherwise disposed of millions
of dollars of their privately held Rambus stock while in
possession of such undisclosed, material adverse information.
The complaint further alleges that plaintiffs and C Class members who
acquired their Rambus shares at prices as high as $127 per share during
the Class Period have suffered tremendous losses.
Rambus' current price, representing an $11 billion reduction in market
capitalization, is more than 90% below its Class Period high.
For further information, contact Murray T.S. Lewis or Clarence Williams
by Mail: 999 Third Avenue, Suite 3600, Seattle, WA 98104 by Phone: 888-
346-6281 or 206-521-0080 or by E-mail: mlewis@cmht.com or
cwilliams@cmht.com.
RENT-WAY: District Court Consolidates Securities Suits In W.D. PA
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The U.S. District Court for the Western District of Pennsylvania has
ordered that twelve class action lawsuit brought against Rent-Way be
consolidated on March 9,2001.
The actions were brought on behalf of purchasers of the Company's
common stock during various periods, all of which fall between January
18, 2000, and October 30, 2000.
The court also appointed Cramer Rosenthal McGlynn, LLC, an investment
advisor that purchased the Company's common stock for the accounts of
its clients, to serve as lead plaintiff and the firm of Gold, Bennett,
Cera & Sidener LLP to serve as lead counsel.
The complaints allege that as a result of accounting irregularities,
the Company's previously issued financial statements were materially
false and misleading thus violating federal securities laws.
The actions allege that the defendants violated Sections 10(b) and/or
Section 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated
therein.
Rent-Way is currently evaluating these claims and possible defenses
thereto.
In the opinion of management, the outcome of any existing litigation
would not have a material adverse effect on the Company's financial
condition or business operations
RICHARDSON ELECTRONICS: Faces Anti-Trust Lawsuit In N.D. Illinois
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Richardson Electronics, Ltd faces a class action lawsuit in behalf of
persons and businesses who purchased electron power tubes from the
company at any time between February 26,1986 and March 16,1993.
Panache Broadcasting of Pennsylvania filed the complaint in the in
United States District Court, Northern District of Illinois.
Varian Associates, Inc. and Varian Supply Company (VASCO - a joint
venture between the Company and Varian Associates, Inc.) were also
named as defendants.
The lawsuit alleges that the company violated anti-trust regulations.
The company denied allegations in a disclosure to the Securities and
Exchange Commission and vowed to vigorously defend the case.
Litigation has been transferred to the US District Court for the
Northern District of Illinois, Eastern Division.
SBARRO INC: Employees Motion To Certify Lawsuit Denied In California
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Twelve current and former general managers of Sbarro restaurants in
California filed a lawsuit against the fast-food retailer in the
Superior Court of California for Orange County.
The complaint alleges that the plaintiffs were improperly
classified as exempt employees under the California wage and hour law.
However, the court denied the plaintiffs' motion to certify the lawsuit
as a class action.
In a disclosure to the Securities and Exchange Commission, Sbarro
management said that they have substantial defenses to the claims and
are mounting a vigorous defense to this action.
STORAGE NETWORKS: Wolf Haldenstein Initiates Suit In S.D. NY
-------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP has commenced a class action
lawsuit in the United States District Court for the Southern District
of New York, on behalf of purchasers of StorageNetworks, Inc. (NASDAQ:
STOR) securities between June 30, 2000 and December 6, 2000, inclusive,
against defendants StorageNetworks, certain of its officers and
directors, and its underwriters.
The case name and index number are Atlas v. StorageNetworks, Inc., 01-
CV-8125. A copy of the complaint filed in this action is available from
the Court, or can be viewed on the Wolf Haldenstein Adler Freeman &
Herz LLP website at www.whafh.com.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling StorageNetworks common stock pursuant to
the June 30, 2000 IPO without disclosing to investors that some of the
underwriters in the offering, including the lead underwriters, had
solicited and received excessive and undisclosed commissions from
certain investors.
Specifically, the complaint alleges that in exchange for the excessive
commissions, defendants allocated StorageNetworks shares to customers
at the IPO price.
To receive the allocations at the IPO price, the underwriters'
brokerage customers had to agree to purchase additional shares in the
aftermarket at progressively higher prices.
The requirement that customers make additional purchases at
progressively higher prices as the price of StorageNetworks stock
rocketed upward was intended to drive StorageNetworks's share price up
to artificially high levels.
This artificial price inflation enabled both the underwriters and their
customers to reap enormous profits by buying stock at the IPO price and
then selling it later for a profit at inflated aftermarket prices.
For further information, contact Fred Taylor Isquith, Gustavo Bruckner,
Michael Miske, or George Peters by Mail: 270 Madison Avenue, New York,
New York 10016 by Phone: (800) 575-0735 by E-mail:
classmember@whafh.com or visit their Website: www.whafh.com. Your e-
mail should refer to StorageNetworks.
THQ INC: Pending Lawsuit Could Prove Harmful To Business
--------------------------------------------------------
"Negative developments with respect to our current class action lawsuit
could harm us." THQ Inc revealed in a disclosure to the Securities and
Exchange Commission.
The Company believes that its pending case could be expensive and
disruptive to business operations.
As the results of complex legal proceedings are unpredictablet, the
payment of a large amount to resolve the class action lawsuit, or other
negative developments could cause stock price to decline significantly.
THQ Inc and some of its officers and directors are defendants in a
class action lawsuit filed in the United States District Court for the
Central District of California.
On December 20, 2000, the court dismissed this action with prejudice as
to all of the defendants.
On April 23, 2001, the United States District Court for the Central
District of California modified its December 20, 2000 order and
permitted plaintiffs to file a third amended complaint on that
date.
The amended complaint alleges that the Company violated Rule 10b-5 and
Section 20(a) of the Securities Exchange Act of 1934, including
allegations that the Company:
(1) manipulated the company's stock price;
(2) distributed false and misleading information concerning
revenue recognition, forecasts and earnings estimates;
(3) selectively disclosed material information; and
(4) engaged in insider trading.
The company has filed an answer denying all of the material allegations
of the third amended complaint and asserting legal and factual
defenses.
USA NETWORKS: Faces Complaint by Stockholders Filed in S.D. NY
---------------------------------------------------------------
Stockholders of USA Networks, Inc. filed on June 5, 2001, the first of
a series of class action complaints alleging violations of the
Securities Act in the Southern District of New York.
The complaint named the Company, certain of its officers and directors
and certain underwriters of the Company's initial public offering as
defendants.
The complaint alleges that the Company violated Section 11 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934.
The suit also states that the prospectus pursuant to which shares were
sold in the IPO was false or misleading in that it failed to disclose:
(1) that the underwriters allegedly were paid commissions by
certain customers in return for receiving shares in the IPO
and
(2) that certain of the underwriters' customers allegedly agreed
to purchase additional shares of the Company in the
aftermarket in return for an allocation of shares in the IPO.
Plaintiffs contend that, as a result of those omissions from the
prospectus, the price of the Company stock was artificially inflated
between November 9, 1999 and October 12, 2000 and that the defendants
are liable for unspecified damages to those persons who purchased the
Company stock during that period.
In a disclosure to the Securities and Exchange Commission, the Company
stated its intent to defend this matter vigorously.
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S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2001. All rights reserved. ISSN 1525-2272.
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