/raid1/www/Hosts/bankrupt/CAR_Public/011018.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, October 18, 2001, Vol. 3, No. 204
Headlines
APPLE COMPUTER: Milberg Weiss Commences Securities Suit in N.D. CA
ASPEON CORPORATION: Plaintiffs Appeal Dismissal of Securities Suit
BEAR STEARNS: Denies Allegations in Securities Suits in S.D. New York
CABLETRON SYSTEMS: Plaintiffs Appeal RI Securities Suit Dismissal
CALIFORNIA AMPLIFIER: Wolf Haldenstein Files C.D. CA Securities Suit
CISCO SYSTEMS: Scott Scott Initiates Securities Suit in N.D. CA
COREL CORPORATION: Court's Dismissal Refusal Sparks Discovery Process
DOLLAR GENERAL: Faruqi Faruqi Commences Securities Suit in M.D. TN
DOLLAR GENERAL: Finkelstein Thompson Lodges M.D. TN Securities Suit
FLORIDA: Judge Rejects Request To Appoint Foster Care Monitors
FREEMARKETS INC.: Finkelstein Thompson Raises Securities Suit in PA
INTEL CORPORATION: Cauley Geller Initiates Securities Suit in N.D. CA
METROMEDIA FIBER: Shapiro Haber Initiates Securities Suit in S.D. NY
NEW FOCUS: Faruqi Faruqi Initiates Securities Suit in N.D.California
ONI SYSTEMS: Wolf Haldenstein Commences Securities Suit in S.D. NY
OTG SOFTWARE: Wolf Haldenstein Commences Securities Suit in S.D. NY
PURCHASEPRO.COM: Shapiro Haber Initiates Securities Suit in Nevada
SCIENTIFIC ATLANTA: Wolf Haldenstein Files Securities Suit in N.D. GA
STRATOS LIGHTWAVE: Wolf Haldenstein Files Securities Suit in S.D. NY
RED HAT: Faruqi Faruqi Commences Securities Suit in S.D. New York
RURAL METRO: Court To Decide On Securities Suit Dismissal In December
TELEPHONE COMPANIES: Blue Springs Council Sues To Get Licensing Taxes
TERADYNE INC.: Milberg Weiss Lodges Securities Suit in Massachusetts
UST LIQUIDATING: Plaintiffs Appeal Securities Suit Dismissal in CA
VESTA INSURANCE: Reaches $61M Settlement Agreement in Alabama Suit
*********
APPLE COMPUTER: Milberg Weiss Commences Securities Suit in N.D. CA
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Milberg Weiss Bershad Hynes and Lerach LLP filed a securities class
action on behalf of purchasers of Apple Computer, Inc. (NASDAQ:AAPL)
common stock during the period between July 19, 2000 and September 28,
2000.
The suit, filed in the United States District Court for the Northern
District of California, charges the Company and Chief Executive Officer
Steve Jobs with violations of the Securities Exchange Act of 1934.
In July 2000, the Company introduced its new Power Mac G4 Dual
Processor, G4 Cube and iMac personal computers.
The Company asserted that they were exceptionally powerful, fast and
attractive, coming with exceptionally attractive designs and containing
new and revolutionary features.
At this time, the Company represented that the development of these new
products was completed, they were ready for mass production and would
be available in quantity very shortly.
The Company claimed this would result in their achieving strong revenue
and earnings per share (EPS) growth in its 4th Quarter 2000 (to end
September 2000) and in 2001.
As a result, the Company's stock climbed to a class period high of $64-
1/8 in September 2000, when four top officers sold 370,000 shares of
their Company stock for $22 million.
Suddenly, just 20-25 trading days later, the Company shocked investors
by revealing a huge 4th Quarter 2000 revenue and EPS shortfall.
This shortfall reportedly was due to:
(1) very poor sales to its education (K-12) market and
(2) poor consumer acceptance of its new personal computer products
(some of which had been late to market, had defects and lacked
features which were essential for market success)
These resulted to the accumulation of excessive inventories of finished
goods in the Company's distribution channel and the Company having to
cancel component part orders and, thereby, incur financial penalties.
As rumors of the Company's troubles circulated prior to and then
following their shocking disclosure, their stock collapsed from $61-
3/64 to $25-3/8 in September 2000.
The stock continued to fall to as low as $17 and then to $13-5/8, a
stock decline that wiped out over $10 billion of Apple's market
capitalization in just a few days.
For more details, contact William Lerach or Darren Robbins by Phone:
(800) 449-4900 by E-mail: wsl@milberg.com or visit the firm's Website:
www.milberg.com/apple.
ASPEON CORPORATION: Plaintiffs Appeal Dismissal of Securities Suit
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Plaintiffs in the securities class action suit against Aspeon Inc.
(NASDAQ:ASPE) appealed federal court's decision to dismiss the case
with prejudice.
Richard Stack, Aspeon's Chief Executive Officer, said, "We believe that
the plaintiff's claims are without merit and we intend to vigorously
oppose the appeal."
The complaint was consolidated from eight separate purported class
action lawsuits in the United States District Court for the Central
District of California.
The lawsuits charge the Company, and the Company's Chief Executive
Officer and Chief Financial Officer with violations of the Securities
Exchange Act of 1934.
The suit was filed on behalf of purchasers of Company securities during
the period between October 28, 1999 and September 28, 2000.
The suit alleges that in September 2000, the Company announced that it
would restate its first quarter 2000 financial statements as a result
of accounting misstatements.
In October 2000, the Company announced that it would require additional
time to file its Form 10-K report for the fiscal year ended June 30,
2000, and would not meet its previously announced October 13, 2000
filing date.
The Company did not specify a new target filing date.
Upon these disclosures, the Nasdaq Stock Market halted trading in
Aspeon pending "additional information requested" from the Company.
The last trade was at $1.50 per share -- a decline of 95% from its
Class Period high of $30.00 per share.
Aspeon, formerly known as Javelin Systems, Inc., designs, develops,
markets, and sells open system touch screen point-of-sale computers
which are sold primarily to the food service and retail industries.
BEAR STEARNS: Denies Allegations in Securities Suits in S.D. New York
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The Bears Stearns Companies, Inc. denied allegations in numerous
securities class actions filed against them in the U.S. District Court
For the Southern District of New York in the last few months.
The suits involve the allocation of securities in certain initial
public offerings and charged the Company with federal securities
violations.
The complaints in these purported class actions allege, among other
things, that between 1998 and 2000:
(1) the underwriters of certain "hot" IPOs of technology and
internet-related companies obtained excessive compensation by
allocating shares in these IPOs to preferred customers who, in
return, purportedly agreed to pay additional compensation to
the underwriters, and the underwriters failed to disclose
this additional compensation; and/or
(2) the underwriters' customers, in return for a favorable
allocation of these securities, agreed to purchase additional
shares in the aftermarket at pre-arranged prices or to pay
additional compensation in connection with other transactions.
The complaints allege that the underwriters violated Sections 11 and
12(a)(2) of the Securities Act of 1933 and Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
Although certain of the complaints also asserted antitrust claims, such
claims against the Company have been voluntarily dismissed without
prejudice.
The Company asserted in a disclosure to the Securities and Exchange
Commission that it has substantial defenses to these claims.
CABLETRON SYSTEMS: Plaintiffs Appeal RI Securities Suit Dismissal
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Plaintiffs in the consolidated securities class action against
Cabletron Systems, Inc. are appealing a federal court's decision
dismissing the suit.
The suit, filed in the United States District Court for the District of
Rhode Island, alleges that the Company and several of its officers and
directors made materially false and misleading statements about
Cabletron's operations.
The suit claims the defendants violated Section 10(b) and Rule
10b-5 under the Securities Exchange Act of 1934 during the period
between March 3, 1997 and December 2, 1997.
The complaint also alleges that the Company's accounting practices
resulted in the disclosure of materially misleading financial results
during the same period.
More specifically, the complaint challenged Cabletron's revenue
recognition policies, accounting for product returns, and the validity
of some sales.
The plaintiffs served a second consolidated class action complaint and
Cabletron filed a motion to dismiss this complaint.
In a ruling dated May 23, 2001, the district court dismissed this
action with prejudice.
The plaintiffs' appeal is pending in the First Circuit Court of
Appeals.
CALIFORNIA AMPLIFIER: Wolf Haldenstein Files C.D. CA Securities Suit
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Wolf Haldenstein Adler Freeman & Herz LLP initiated a lawsuit on behalf
of all purchasers of California Amplifier, Inc (NASDAQ:CAMP) securities
during the period between April 7, 2000 and March 28, 2001, inclusive.
The complaint, filed in the United States District Court for the
Central District of California, alleges that the Company violated
federal securities laws.
Specifically, the complaint alleges that during the class period the
company was touting its record results only to that during preparations
for an audit examination, the Company's corporate controller abruptly
resigned.
The controller advised by letter that in fiscal year 2000 he made
certain adjustments to the Company's accounting records that caused a
reduction in recorded expenses.
This may have resulted in overstating net income for the fiscal year
ended February 26, 2000 by as much as $2.2 million, or $.18 per basic
share.
For more information, contact Gregory M. Nespole, Michael Miske, George
Peters or Fred Taylor Isquith by Mail: 270 Madison Avenue, New York,
New York 10016 by Phone: (800) 575-0735 by E-mail:
classmember@whafh.com or visit the firm's Website: www.whafh.com. E-
mail should refer to California Amplifier.
CISCO SYSTEMS: Scott Scott Initiates Securities Suit in N.D. CA
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Scott and Scott, LLC commenced a securities class action on behalf of
purchasers of Cisco Systems, Inc. (Nasdaq: CSCO) common stock during
the period between August 10, 1999 and April 16,2001.
The suit, filed in the United States District Court for the Northern
District of California, charges the Company and certain of its officers
and directors with violations of the Securities Exchange Act of 1934.
The Company and its subsidiaries are engaged in selling products for
networking in the Internet.
The complaint reveals that by the beginning of the class period in
August 1999, internet service providers and competitive local telephone
companies had technology to deploy, but they had little capital.
The Company allegedly used this as an opportunity to increase its sales
by providing capital financing to such companies.
The Company, however, made such financing conditional upon the purchase
of large amounts of the Company's product.
The Company was able to report "record" earnings each quarter through
this alleged manipulation, the shipment of defective or incomplete
product and the Company's failure to adequately accrue for excess and
overvalued inventory and finance receivables that were not collectible.
Defendants made positive but false statements about their products,
financial results and business during the class period.
As a result, Company stock traded as high as $82.
The inflation in the Company's stock price was essential to its main
corporate strategy, that of growth through acquisition, which they
accomplished through the exchange of inflated shares.
In addition, each of the defendants had the motive and the opportunity
to perpetrate the fraudulent scheme and course of business described
herein in order to sell $595 million worth of their own Company shares
at prices as high as $80.24 per share, or 84% higher than the price to
which Cisco shares dropped after the end of the class period, as the
true state of Cisco's business and prospects began to reach the market.
After completing more than 20 major acquisitions between September 1999
and February 2001, by issuing more than 400 million shares of Cisco
stock, and selling more than 10 million shares of their personal Cisco
holdings, Cisco announced extremely disappointing 2nd Quarter Fiscal
2001 results, including EPS of only $0.18.
This disclosure shocked the market, causing the Company's stock to
decline to less than $30 per share before closing at $31-1/16 per share
on 2/7/01, on record volume of more than 279 million shares.
The Company later admitted that 3rd Quarter Fiscal 2001 sales would be
less than $4.8 billion, or lower than any quarter since the 2nd Quarter
Fiscal 2000.
Defendants' misconduct has wiped out over $400 billion in market
capitalization as Company stock has fallen 84% from its class period
high of $82 per share.
In April 2001, the Company announced a $2.5 billion write-down of
inventory (or 90% of its inventory) of components in its service
business. This was one of the largest inventory write-downs in U.S.
history.
Cisco stock has dropped to as low as $13-3/16.
For more information, contact David R. Scott or Neil Rothstein by
Phone: 800-404-7770 by E-mail: nrothstein@scott-scott.com or visit the
firm's Website: www.scott-scott.com
COREL CORPORATION: Court's Dismissal Refusal Sparks Discovery Process
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Discovery finally commenced in the securities class action against
Corel Corporation after the U.S. District Court for the Eastern
District of Pennsylvania refused to dismiss the suit.
The suit was initially filed in March 2000, charging the Company and
Dr. Michael C.J. Cowpland of federal securities act violations.
Anthony Basilio and Fred Spagnola filed the suit on behalf of
purchasers of Corel common shares between December 7, 1999 and December
21, 1999.
The complaint alleges that the defendants violated Section 10(b),
Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, by
failing to disclose material information about the Company's financial
condition.
Plaintiff Alan Treski filed a second complaint in March 2000, against
the same defendant and making substantially similar allegations.
Four additional complaints filed in the same jurisdiction and one
complaint filed in the District of Massachusetts contain similar
allegations.
In June 14, 2000, the court appointed Fred Spagnola, Michael Perron and
David Chavez as Lead Plaintiffs, and the law firms of Weinstein,
Kitchenoff Scarlato & Goldman Ltd. and Savett Frutkin Podell & Ryan,
P.C. as Co-Lead Counsel.
The Court consolidated the cases in the Eastern District of
Pennsylvania and in August 2000, an amended consolidated complaint was
filed, which expanded the class period, from December 7, 1999 to March
20, 2000.
In October 2000, the Company asked the Court to dismiss the suit on the
grounds of Forum Non Conveniens and Failure to State a Claim, which the
court denied on May 31, 2001.
The Company and co-defendant Cowpland have filed their answers to the
amended complaint, denying all liability to plaintiffs and asserting
various affirmative defenses.
The plaintiffs have moved for class certification. Discovery requests
have been served by both sides and Corel has commenced depositions of
class representative plaintiffs.
DOLLAR GENERAL: Faruqi Faruqi Commences Securities Suit in M.D. TN
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Faruqi and Faruqi LLP initiated a securities class action lawsuit on
behalf of all purchasers of Dollar General Corporation (NYSE: DG)
securities between May 12, 1998 and April 27, 2001, inclusive.
The suit, filed in the United States District Court for the Middle
District of Tennessee, names as defendants the Company and its Chief
Executive Officer Cal Turner, Jr.
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder.
Besides issuing a series of false and misleading press releases and/or
failing to disclose adverse facts about its financial results, the
complaint specifically alleges that the Company:
(1) deceived the investing public regarding the Company's
prospects and business,
(2) artificially inflated the prices of the Company's
publicly traded securities,
(3) caused plaintiff and other members of the class to purchase
the Company's publicly traded securities at inflated prices,
(4) allowed the Company to raise $200 million in a debt offering;
and
(5) allowed defendant Turner and his family to register to sell
nearly $300 million worth of their holdings in Structured
Yield Product Exchangeable for Stock offering.
However, in April 2001, the Company announced it was delaying the
filing of its annual report on Form 10-K for the fiscal year 2000 in
anticipation of restating its audited financial statements for fiscal
years 1998 and 1999 as well as restating the unaudited financial
information for the fiscal year 2000.
Moreover, the Company further disclosed that it had become aware of
certain accounting irregularities and as a result, the audit committee
of the Company's board of directors is conducting an internal
investigation.
In response, the Company's stock price plummeted to $16.50, or more
than 37% lower than the class period high of $26.
For more information, contact Anthony Vozzolo by Mail: 320 East 39th
Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330
by E-mail: avozz@faruqilaw.com or visit the firm's Website:
www.faruqilaw.com
DOLLAR GENERAL: Finkelstein Thompson Lodges M.D. TN Securities Suit
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Finkelstein, Thompson & Loughran filed a securities class action
lawsuit against Dollar General Corporation (NYSE: DG) on behalf of
purchasers of the Company's stock from May 12, 1998 to April 27, 2001.
The complaint, filed in the U.S. District Court for the Middle District
of Tennessee, alleges that the Company issued false and misleading
financial statements and news releases about its earnings.
Specifically, in April 2001, the Company admitted that:
(1) it would delay filing its annual report for fiscal 2000;
(2) it had begun investigating "accounting irregularities" ; and
(3) its audit committee was reviewing allegations of fraudulent
behavior
In addition, the company disclosed that it would need to restate its
results for fiscal years 1998, 1999 and for the first three quarters of
2000.
For further details, contact Donald J. Enright by Phone: 888-333-4409
or 202-337-8000 by E-mail: dje@ftllaw.com or visit the firm's Website:
www.ftllaw.com
FLORIDA: Judge Rejects Request To Appoint Foster Care Monitors
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U.S. District Judge Federico Moreno recently rejected a request by
children's advocates that the court appoint monitors for Broward
County's foster care system, which was created as a statewide model.
Attorneys for the county's 1,500 foster children claimed the system was
approaching a meltdown, but the state countered that the advocates did
not prove their "outrageous allegations."
Judge Moreno cited improvement since the two sides settled a lawsuit in
May 2000, adding, "I certainly hope that progress continues to be made
and state officials do not rest on their laurels."
Attorneys for the foster children have until next month to challenge
state operations under the settlement and may ask Judge Moreno to
extend the length of his supervision.
Judge Moreno did say, however that he was troubled by some of the
allegations, which included claims that foster children are being
sexually and physically abused and are spending nights in state offices
when proper homes can't be found quickly.
The judge observed that experts in the field recognized "that a problem
that has taken years to develop over several administrations cannot be
solved over a few months."
State Attorney Paul Hancock said, "The trend line is up, not down.
Every trend line is improving." Hancock argued that Judge Moreno has
no power to intervene and said the children's advocates did not back up
their claims with facts.
For example, Hancock pointed out that the number of foster children
receiving monthly visits by caseworkers grew from 37 percent last year
to 74 percent this year.
Michael Dale, a Nova Southeastern University law professor, speaking
for the foster children, claimed the system is "fundamentally unsafe"
and unconstitutional.
Dale wants court-appointed monitors to oversee the operation and
recommend policy changes for systemic problems.
A separate class-action lawsuit covering all the other foster children
Florida contains similar complaints as those put forth in this lawsuit.
FREEMARKETS INC.: Finkelstein Thompson Raises Securities Suit in PA
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Finkelstein, Thompson & Loughran filed a class action lawsuit in the
United States District Court for the Western District of Pennsylvania
against FreeMarkets, Inc. (Nasdaq: FMKT) and certain of its officers
who are accused of illegally misleading investors.
The class action, captioned Crowley v. FreeMarkets, Inc., was filed on
behalf of purchasers of Company stock between July 24, 2000 and April
23, 2001, inclusive.
The complaint charges defendants with violations of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The complaint alleges that defendants issued a series of materially
false and misleading financial information that artificially inflated
the price of Company securities during the class period.
For more details, contact Donald J. Enright by Phone: 888-333-4409 or
at 202-337-8000 by E-mail: dje@ftllaw.com or visit the firm's Website:
www.ftllaw.com
INTEL CORPORATION: Cauley Geller Initiates Securities Suit in N.D. CA
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Cauley Geller Bowman & Coates LLP commenced a securities class action
on behalf of purchasers of Intel Corp. (NASDAQ:INTC) publicly traded
securities during the period between July 19, 2000 and September 29,
2000, inclusive.
The suit, filed in the United States District Court for the Northern
District of California, charges the Company and certain of its officers
and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that as a result of the Company's extraordinarily
bullish statements and assurances during July to August 2000, the
Company's stock hit its all-time high of $75-13/16.
The suit asserts that the Company issued positive, but false,
statements about:
(1) the strong demand for Intel's products,
(2) Intel's improved manufacturing processes and efficiencies,
(3) the successful development and introduction of its Pentium II
microprocessor,
(4) the successful development of the Pentium IV, Itanium and
Timna chips and,
(5) the outlook for Intel's 3rd Quarter 2000 results, issued from
July 18-19, 2000 through the Intel Developer Forum
In September 2000, the Company admitted it was canceling its Timna chip
due to technical development problems and a lack of market demand and
was delaying shipment of its Pentium IV and Itanium chips due to design
and development problems.
The Company's stock dropped, falling to as low as $35-3/8.
Thus, in just over five weeks, Company stock dropped from its all- time
high of $75-13/16 to its lowest price in years, $35-3/8, a market
capitalization loss of $271 billion, wiping out 50% of their stock
value.
For more information, contact Jackie Addison, Sue Null or Charlie
Gastineau by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
1-888-551-9944 (toll-free) by E-mail: info@classlawyer.com or visit the
firm's Website: www.classlawyer.com
METROMEDIA FIBER: Shapiro Haber Initiates Securities Suit in S.D. NY
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Shapiro Haber & Urmy LLP commenced a securities class action against
Metromedia Fiber Networks, Inc. (NASDAQ:MFNX) and certain of its
officers and directors.
The case was filed on behalf of all persons who purchased the common
stock of Metromedia during the period from January 8, 2001 through July
2, 2001, inclusive.
The suit, filed in the U.S. District Court for the Southern District of
New York, alleges violations of section 10(b) of the Securities
Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and Section
20(a) of the Exchange Act.
The suit alleges that the defendants' wrongful conduct artificially
inflated the price of the Company's common stock during the class
period.
The defendants allegedly misled the investing public that the Company
had obtained a fully underwritten $350 million credit facility from
Citicorp USA, Inc., which would fully fund the Company's business plan.
In July 2001, defendants belatedly disclosed:
(1) that Citicorp had only committed to lend $62.5 million; and
(2) that the $350 million credit facility was subject to obtaining
additional commitments from other lenders for the remaining
$287.5 million, which the Company did not have;
In response to this news, the price of the Company's stock dropped to
$1.93 per share, which represents an almost 90% decline in the value of
its stock from a class period high of $19.06 per share.
For more information, contact Theodore M. Hess-Mahan or Liz Hutton by
Mail: 75 State Street, Boston, MA 02109 by Phone: (800) 287-8119 by
Fax: (617) 439-0134 or by E-mail: cases@shulaw.com.
NEW FOCUS: Faruqi Faruqi Initiates Securities Suit in N.D.California
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Faruqi and Faruqi LLP commenced a securities class action on behalf of
all purchasers of New Focus, Inc. (NASDAQ: NUFO) securities between
January 31, 2001 and March 5, 2001, inclusive.
The suit was filed in the United States District Court for the Northern
District of California against the Company and certain of its officers
and directors.
The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder.
The Company allegedly issued issuing false and misleading press
releases concerning their financial condition and announced that it was
raising guidance from approximately $150 million to $240 million.
As a result, the price of the Company's common stock was artificially
inflated throughout the class period, reaching as high as $60.00 per
share.
This allowed the defendants to collectively sell millions in personally
held New Focus Stock.
However, the Company disclosed, in early March that it was in fact
lowering guidance for fiscal year 2001 as a result of various problems
including inventory build-up and delayed and canceled orders form large
customers.
In response, the Company's stock price of plummeted too approximately
$18.00 per share.
For more information, contact Anthony Vozzolo by Mail: 320 East 39th
Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330
or by E-mail: avozz@faruqilaw.com or visit the firm's Website:
www.faruqilaw.com
ONI SYSTEMS: Wolf Haldenstein Commences Securities Suit in S.D. NY
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Wolf Haldenstein Adler Freeman & Herz LLP initiated a class action
lawsuit on behalf of purchasers of ONI Systems Corp. (NASDAQ: ONIS)
securities between May 31, 2000 and December 6, 2000, inclusive.
The suit was filed in the United States District Court for the Southern
District of New York against the Company, certain of its officers and
directors, and its underwriters.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling Company stock pursuant to the May 31, 2000
IPO without disclosing:
(1) that some of the underwriters in the offering, including the
lead underwriters, had solicited and received excessive and
undisclosed commissions from certain investors;
(2) that in exchange for the excessive commissions, defendants
allocated Company shares to customers at the IPO price;
(3) 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 above practices were intended to drive the Company'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 more details, contact Fred Taylor Isquith, Thomas Burt, Gustavo
Bruckner, Michael Miske, George Peters, or Derek Behnke by Mail: 270
Madison Avenue, New York, New York 10016 by Phone: (800) 575-0735 by E-
mail: classmember@whafh.com or visit the firm's Website: www.whafh.com.
E-mail should refer to ONI.
OTG SOFTWARE: Wolf Haldenstein Commences Securities Suit in S.D. NY
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Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action on behalf of purchasers of OTG Software, Inc. (NASDAQ: OTGS)
securities between March 10, 2000 and December 6, 2000, inclusive.
The suit was filed in the United States District Court for the Southern
District of New York against the Company, certain of its officers and
directors, and its underwriters.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling OTG Software common stock pursuant to the
March 10, 2000 IPO without disclosing to investors that:
(1) some of the underwriters in the offering, including the lead
underwriters, had solicited and received excessive and
undisclosed commissions from certain investors;
(2) in exchange for the excessive commissions, defendants
allocated Company shares to customers at the IPO price and 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 Company stock rocketed
upward was intended to drive the Company'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 more information, contact Fred Taylor Isquith, Thomas Burt, 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 the firm's Website: www.whafh.com.
All e-mail correspondence should make reference to OTG Software.
PURCHASEPRO.COM: Shapiro Haber Initiates Securities Suit in Nevada
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Shapiro Haber & Urmy LLP commenced a securities class action in the
United States District Court for the District of Nevada against
PurchasePro.com, Inc.
The suit, filed on behalf of purchasers of the Company's common stock
during the period July 19, 2000 through April 25, 2001, inclusive.
The suit, which also named certain of the Company's officers and
directors as defendants, alleges that:
(1) the Company's recurring revenues in the second quarter of 2000
were overstated;
(2) that $6 million of revenue in its fourth quarter of 2000 was
improperly recognized because the revenue resulted from a
"cross-selling" transaction in which the Company paid the
customer $10 million in exchange for the revenue from the
customer;
(3) that the Company entered into other such "cross-selling"
transactions that inflated the Company's revenues; and
(4) that the Company falsely projected increased revenue and
earnings for the first quarter of 2001, that enabled Company
insiders to sell shares in March 2001 at inflated prices.
The complaint alleges that as a result of this wrongdoing, the
defendants violated section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder.
For more information, contact Thomas G. Shapiro by Mail: 75 State
Street, Boston, Massachusetts 02109 by Phone: (800) 287-8119 by Fax:
(617) 439-0134 or by E-mail: info@shulaw.com or visit the firm's
Website: www.shulaw.com
SCIENTIFIC ATLANTA: Wolf Haldenstein Files Securities Suit in N.D. GA
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Wolf Haldenstein Adler Freeman & Herz LLP commenced a class action
lawsuit on behalf of all purchasers of Scientific Atlanta, Inc. (NYSE:
SFA) securities between April 19, 2001 and July 19, 2001.
The suit was filed in the United States District Court for the Northern
District of Georgia, Atlanta Division against the Company and:
(1) James F. McDonald, Chairman and Chief Executive Officer, and
(2) Wallace G. Haislip, Senior Vice-President, Chief Financial
Officer and Treasurer
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and SEC Rule 10b-5, promulgated
thereunder.
The defendants allegedly issued materially false and misleading
statements that had the effect of artificially inflating the market
price of the Company's securities.
For example, in May 2001, the defendants reported "record" financial
results with bookings, sales, backlog and cash each setting all-time
records.
The defendants also touted the Company's increase in production
capacity of set-top boxes.
The complaint further alleges that as a result of misrepresentations
like these, the price of the Company's common stock was artificially
inflated throughout the class period.
The complaint alleges that during this period of artificial inflation,
Haislip and McDonald took advantage of their inside status to their own
shares of SFA at artificially high prices for proceeds of over $46
million.
In July 2001, however, defendants revealed a 21% decline in bookings
from the previous year's fourth quarter and a decrease in the Company'
s set-top box shipments.
The decline in bookings was attributed to, among other things, a
surplus in customer inventory levels.
The complaint alleges that this contradicted defendants' statements
regarding production capacity.
Additionally, the Company announced that it was revising its earnings
estimates for the coming quarter.
As a result of these announcements, Company shares fell by more than
34% to close at $22.80 per share on heavy trading volume.
The complaint asserts claims for securities fraud against each of the
defendants, alleging that each is responsible for misleading press
releases and/or financial statements issued during the Class Period
For more information, contact Fred Taylor Isquith, Gregory M. Nespole,
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 the firm's Website: www.whafh.com. All
e-mail correspondence should make reference to Scientific Atlanta.
STRATOS LIGHTWAVE: Wolf Haldenstein Files Securities Suit in S.D. NY
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Wolf Haldenstein Adler Freeman & Herz LLP lodged a securities class
action on behalf of purchasers of Stratos Lightwave, Inc. (NASDAQ:
STLW) securities between June 27, 2000 and December 6, 2000, inclusive.
The suit was filed in the United States District Court for the Southern
District of New York against the Company, certain of its officers and
directors, and its underwriters.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling Stratos common stock pursuant to the June
27, 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 Stratos shares to customers at the
IPO price.
To receive the allocations at the IPO price, the underwriters'
brokerage customers allegedly 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 Stratos stock rocketed
upward was intended to drive Stratos'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 more information, contact Fred Taylor Isquith, Gregory Nespole,
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 the firm's Website: www.whafh.com. All
e-mail correspondence should make reference to Stratos.
RED HAT: Faruqi Faruqi Commences Securities Suit in S.D. New York
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Faruqi and Faruqi LLP initiated a securities class action on behalf of
all purchasers of Red Hat, Inc. (NASDAQ: RHAT) securities between
August 11, 1999 and May 25, 2000, inclusive.
The suit was filed in the United States District Court for the Southern
District of New York against the Company and certain of its officers
and directors.
The complaint charges that defendants violated 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.
The suit claims that the Company's offering documents filed in
connection with the Company's initial public offering failed to
disclose that:
(i) the IPO underwriters had solicited and received excessive and
undisclosed commissions from certain investors in exchange for
which they allocated to those investors material portions of
the restricted number of Company shares issued in connection
with the IPO; and
(ii) the IPO underwriters had entered into agreements with
customers whereby they agreed to allocate Company shares to
those customers in the IPO in exchange for which the customers
agreed to purchase additional Hat shares in the aftermarket at
pre-determined prices.
For more details, contact Anthony Vozzolo by Mail: 320 East 39th Street
New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-
mail: avozz@faruqilaw.com or visit the firm's Website:
www.faruqilaw.com
RURAL METRO: Court To Decide On Securities Suit Dismissal In December
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The U.S. District Court for the District of Arizona will hear this
December oral arguments on the motion to dismiss the amended securities
suit against Rural Metro Corporation.
The suit, entitled Ruble vs. Rural Metro Corporation, et.al., was filed
against the Company and defendants:
(1) Warren S. Rustand, former Chairman of the Board and Chief
Executive Officer,
(2) James H. Bolin, former Vice Chairman of the Board,
(3) Robert E. Ramsey, Jr., former Executive Vice President and
former Director
The suit, filed on behalf of a purchasers of the Company's publicly
traded securities between April 28,1997 and June 11,1998, alleges
violations of Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934, as amended.
The suit alleges that the defendants issued certain false and
misleading statements regarding certain aspects of their financial
status.
These statements allegedly caused the Company's common stock to be
traded at artificially inflated prices.
Furthermore, defendants Bolin and Ramsey allegedly sold stock during
this period, taking advantage of inside information that the stock
prices were artificially inflated.
The court dismissed the suit in January 2001, but granted the
plaintiffs leave to replead.
On March 31, 2001, the plaintiffs filed the second amended complaint,
which the Company promptly asked the court to dismiss.
The Company said that the suit could have a material adverse effect on
the Company if a judgment were entered against it.
TELEPHONE COMPANIES: Blue Springs Council Sues To Get Licensing Taxes
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The Blue Springs City Council voted to join a class action lawsuit
against five wireless telephone companies to get them to pay an
estimated $370,000 in taxes.
The council said that the companies should start paying the 5% tax for
operating in city limits outlined in ordinances since 1968.
The council plans to sue these telecommunications companies:
(1) Verizon Wireless,
(2) Voice Stream,
(3) Cingular Wireless,
(4) AT&T Wireless,
(5) Sprint P.C.S.
None of the companies operating in Blue Springs have been paying taxes
until recently, when Verizon Wireless agreed to pay licensing tax on a
quarter basis, but under protest.
The other four companies are waiting to work the matter out in court,
contending that their wireless service is more closely related to radio
instead of telephone service.
Eric Johnson, Assistant City Administrator, said that the matter was
"an issue of fairness.They are not paying and everyone else is."
Johnson said Blue Springs got involved because city ordinances and the
licensing agreement resemble those in Sunset Hills, Mo., the St. Louis
suburb that won its case against one wireless company in the Missouri
Court of Appeals, Eastern District.
Eighteen cities in Missouri have agreed to join in the suit, which has
not yet been filed.
The City Council approved $17,000 in funds to participate in the
lawsuit.
"This is a major fight," Johnson said. "These companies have major
resources. If 18 cities get them to comply with local law, you can
imagine what financial impact it will have on those companies."
TERADYNE INC.: Milberg Weiss Lodges Securities Suit in Massachusetts
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Milberg Weiss Bershad Hynes & Lerach LLP commenced a class action
lawsuit on behalf of purchasers of the common stock of Teradyne, Inc.
(NYSE:TER) between July 14, 2000 and October 17, 2000, inclusive.
The suit is pending in the United States District Court for the
District of Massachusetts against the Company, George Chamillard and
Michael A. Bradley.
The Complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder.
The defendants allegedly issued a series of material misrepresentations
to the market between July 14, 2000 and October 17, 2000, thereby
artificially inflating the price of the Company's common stock.
The complaint alleges that the Company was experiencing declining
orders in its semiconductors testing systems division, which would
cause the Company's growth rate to slow from historical levels.
Defendants concealed this adverse fact from investors, so that the
Company could complete the acquisition of Herco Technology Corporation
and Perception Laminates, Inc., d/b/a/ Synthane Taylor, using
artificially inflated common stock as currency.
When the truth about the Company's business was revealed to the public,
the price of Teradyne common stock dropped precipitously.
For more details, contact Steven G. Schulman or Samuel H. Rudman by
Mail: One Pennsylvania Plaza, 49th fl. New York, NY, 10119-0165 by
Phone: (800) 320-5081 by E-mail: Teradynecase@milbergNY.com or visit
the firm's Website: www.milberg.com
UST LIQUIDATING: Plaintiffs Appeal Securities Suit Dismissal in CA
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Plaintiffs in the securities class action against UST Liquidating
Corporation have appealed Los Angeles Superior Court's decision
dismissing the suit.
Stourbridge Investments Ltd. originally filed the suit in June 2000
against the Company and:
(1) Barry S. Rosenstein,
(2) Marc A. Weisman,
(3) Dan R. Cook,
(4) Danaher Corporation, Buyer and
(5) RSP Capital, L.L.C.
The suit alleged breach of fiduciary duty in connection with the sale
of substantially all of the Company's assets to Veeder-Root Service
Company, a wholly owned subsidiary of Danaher Corporation.
The Company sold its assets for an adjusted purchase price of
$16,589,000 and Veeder-Root has taken over its operations upon the
closing of the sale.
The complaint was later amended to include the allegation of corporate
waste, and change the name of plaintiffs and defendants.
Joseph Dilillo and David L. Timmons replaced Stourbridge Investments
Ltd. as the named plaintiffs, and named as additional defendants were:
(i) David Shapiro,
(ii) Michael Lerner,
(iii) Sagaponack Partners, Ltd,
(iv) Sagaponack International Partners, L.P. and
(v) Sagaponack International Holdings, LLC
In addition, plaintiffs filed a motion for a Preliminary injunction
that was denied by the Court in all respects.
The Company, Barry Rosenstein, Marc Weisman and RSP Capital LLC
subsequently filed a demurer to plaintiffs' first amended complaint
contending that plaintiffs have failed to state a valid cause of
action.
The demurrer asserted that plaintiffs' direct claim on behalf of
individual shareholders was barred as a matter of law because they
could not pursue a claim on behalf of the Company.
The demurrer further asserted that plaintiffs lacked standing to pursue
their derivative claim, or second cause of action, because they did not
comply with the statutory procedures for filing a derivative action on
behalf of the Company.
The plaintiffs reportedly did not make a demand on the Board, and they
did not demonstrate that such a demand would be futile.
The Court granted the defendants' demurrer at a hearing on October 11,
2000.
Plaintiffs filed a notice of appeal and voluntarily dismissed with
prejudice their derivative cause of action.
Their appeal is solely with regard to the direct cause of action, which
the trial court dismissed with prejudice.
All parties have fully briefed the appeal with the California Court of
Appeals and oral argument has been scheduled for October 26, 2001.
VESTA INSURANCE: Reaches $61M Settlement Agreement in Alabama Suit
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Vesta Insurance Group, Inc. (NYSE: VTA) has reached an agreement to
settle for $61 million the securities suit against the Company and
certain current and former officers and directors.
The settlement is subject to execution of definitive settlement
documents and approval of the U.S. District Court in Alabama.
The derivative action lawsuit in the Circuit Court of Jefferson County,
Alabama is being dismissed with prejudice.
The settlement was effected through the assistance of a mediator and
without any admission of liability on the part of the defendants, each
of whom expressly deny any wrongdoing or liability whatsoever.
The consolidated suit alleged violations of Section 10(b) of the
Securities Exchange Act of 1934 by the Company, certain of its present
and former officers and directors, their former independent public
accountants and parent company Torchmark Corporation.
The suit also alleged violations of Section 20(a) of the Exchange Act
by certain former Vesta officers and directors and Torchmark
Corporation by acting as "controlling persons" of Vesta in connection
with certain accounting irregularities in their reported financial
results and filed financial statements.
Vesta will fund $18.5 million towards the settlement and the Company's
excess directors and officers liability insurance carriers will fund
the remaining $42.5 million.
The Company will use its line of credit to finance its portion of the
settlement and record a pre-tax one-time charge of approximately $30
million against earnings, to cover their contribution to the settlement
and other expenses incurred.
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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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