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/raid1/www/Hosts/bankrupt/CAR_Public/011207.mbx C L A S S A C T I O N R E P O R T E R Friday, December 7, 2001, Vol. 3, No. 239 Headlines ASIA PULP: Lead Plaintiff Yet To Be Named In New York Securities Suits AUCTION HOUSES: Deliberations In Reseller Price-Fixing Suit Proceeds CHARTERED SEMICONDUCTOR: Schiffrin Barroway Files Securities Suit in NY COBALT NETWORKS: Lovell Stewart Initiates Securities Suit in S.D. NY DJ ORTHOPEDICS: Milberg Weiss Commences Securities Suit in S.D. CA ENRON CORPORATION: Milberg Weiss Initiates Securities Suit in S.D. TX FLORIDA: Federal Judge Throws Out Suit Against State Foster-Care System FLORIDA: Certification of Sexual Harrasment, Bias Suit V Union Affirmed FLORIDA POWER: Supreme Court Reviewing Age-Bias Suit Claims GIGAMEDIA LIMITED: Stull Stull Commences Securities Suit in S.D. NY INDIAN FUNDS: Alarming System Vulnerability Sparks Net Disconnection INSWEB CORPORATION: Lovell Stewart Initiates Securities Suit in S.D. NY INTERNET INITIATIVE: Lovell Stewart Lodges Securities Suit in S.D. NY KENTUCKY: School Board Settles School "Sports Equality" Suit LANZO CONSTRUCTION: Sued By IL Residents After Rains Cause Flooding LEXMARK INTERNATIONAL: Cauley Geller Lodges Securities Suit in E.D. KY LEXMARK INTERNATIONAL: Schiffrin Barroway Files Securities Suit in KY MICROSOFT CORPORATION: FL Consumers To Continue Suit Despite Settlement NEXTCARD INC.: Schatz Nobel Lodges Securities Suit in N.D. California PROVIDIAN FINANCIAL: Schatz Nobel Commences Securities Suit in N.D. CA REGENT COMMUNICATIONS: Milberg Weiss Files Securities Suit in S.D. NY REZULIN LITIGATION: Judge Refuses To Grant Certification To WV Suit STARMEDIA NETWORK: Weiss Yourman Commences Securities Suit in S.D. NY THESTREET.COM: Lovell Stewart Commences Securities Suit in S.D. NY VANTAGEMED CORPORATION: Reaches Pact To Settle Securities Suit in CA VIRATA CORPORATION: Schiffrin Barroway Files Securities Suit in S.D. NY WASHINGTON: Foster Care Declared "Inadequate", Court To Oversee Program WORLD WRESTLING: Lovell Stewart Commences Securities Suit in S.D. NY XO COMMUNICATIONS: Finkelstein Thompson Commences Securities Suit in VA XO COMMUNICATIONS: Stull Stull Initiates Securities Suit in E.D. VA ********* ASIA PULP: Lead Plaintiff Yet To Be Named In New York Securities Suits ---------------------------------------------------------------------- Plaintiffs in several securities class actions accusing beleaguered Asia Pulp and Paper Co. Ltd. (formerly NYSE: PAP) await the appointment of a lead plaintiff in the suits, according to Samuel Rudman, with the law firm Milberg Weiss Bershad Hynes and Lerach LLP, one of the firms that initiated a suit against the Company. The suits, pending in the US District Court for the Southern District of New York, were commenced against the Singapore-based company accusing it of misstating financial results to artificially inflate its share price. They allege that the Company used dubious accounting practices to help it raise hundreds of millions of dollars in capital through the issuance of bonds and other securities. Mr. Rudman said that he could not say specifically how many Company shareholders have come forward to be named as plaintiffs in the suits. "There are many plaintiffs in the lawsuit," he told Reuters. "There was I think about a half dozen lawsuits actually filed, and many more people sought to move to be lead plaintiff." The various complaints, filed in the U.S. District Court for the Southern District of New York, name as defendants both the company and a number of its associates. Mr. Rudman adds, "The different lawsuits have different defendants...Some are against the company, some company insiders, and some of the lawsuits name the auditors, Arthur Andersen and some of the investment bankers that sold the bonds here in the United States." Last month, Arthur Andersen resigned as APP's auditor without giving a reason. According to Rudman, the Company has hired Jones, Day, Beavis & Pogue as its legal representation in the United State. Company shares were delisted from the New York Stock Exchange in July, while its Indonesia subsidiaries Indah Kiat and Tjiwi Kimia were suspended from the Jakarta Stock Exchange for failure to submit their latest financial statements. AUCTION HOUSES: Deliberations In Reseller Price-Fixing Suit Proceeds -------------------------------------------------------------------- The jury in the auction houses price-fixing class action has begun its deliberations to decide whether Sotheby's former Chairman Alfred Taubman was guilty of conspiring with competitor house Christie's two fix reseller fees to prop up an ailing art market, according to a USA Today report. Prosecutors have accused Taubman of scheming with Christie's Chairman Sir Alfred Tennant to steal as much as $400 million in commissions from art sellers from 1993 to 1999. Sotheby's and Christie's together control 90% of the art auction market. The deliberations began after three weeks of testimony, most notably from former Sotheby's CEO and Taubman prot,g, Diana Brooks, who has pleaded guilty for her role in the conspiracy and has told the court of her secret meetings with then-Christie's CEO Christopher Davidge. Defense attorneys for Taubman continued to deny the claims, accusing Ms. Brooks of testifying against her mentor to avoid a prison term. They also alleged that Ms. Brooks was the one who called the shots, while Taubman sometimes slept through board meetings and focused on non-financial matters. Mr. Tennant has refused to leave England to face the charges. The antitrust case is not covered by extradition treaties. A guilty verdict could have large implications for Sotheby's because Taubman is Sotheby's largest and controlling shareholder. USA Today reports that Taubman, if convicted, faces 3 years in prison and a $350,000 fine. Bruce Wolmer, Editor of Art and Auction magazine, said "A conviction would set up a potential power struggle in preparation to get the company ready for a sale." CHARTERED SEMICONDUCTOR: Schiffrin Barroway Files Securities Suit in NY ----------------------------------------------------------------------- Schiffrin Barroway initiated a securities class action on behalf of purchasers of the common stock of Chartered Semiconductor Manufacturing, LTD. (NASDAQ:CHRT) between October 29, 1999 and December 6, 2000, inclusive in the United States District Court Southern District of New York against: (1) Salomon Smith Barney, Inc., (2) Credit Suisse First Boston Corporation, (3) SG Cowen Securities Corporation and (4) Soundview Technology Group, Inc. The suit alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In October 1999, the Company commenced an initial public offering of 225,000,000 of its shares of common stock, at an offering price of $20 per share. In connection therewith, the Company filed a registration statement, which incorporated a 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) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of Company shares issued in connection with the IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate Company shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, 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 COBALT NETWORKS: Lovell Stewart Initiates Securities Suit in S.D. NY -------------------------------------------------------------------- Lovell & Stewart LLP filed a securities class action on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of Cobalt Networks, Inc. (formerly NasdaqNM: COBT) between November 4, 1999 and December 6, 2000, inclusive. The suit was lodged against the Company, certain of its officers and directors, and underwriters: (1) The Goldman Sachs Group, Inc., (2) Merrill Lynch, Pierce, Fenner & Smith, Incorporated, (3) FleetBoston Robertson Stephens, Inc., (4) Soundview Technology Corporation, (5) Bear, Stearns & Co., Inc. and (6) Chase H&Q (formerly Hambrecht & Quist LLC) The lawsuit asserts claims under Section 12 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and is pending in the U.S. District Court for the Southern District of New York. The complaint alleges that certain individuals who were officers and directors of the Company at the time of its IPO violated the federal securities laws by issuing and selling stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, defendants allocated Company shares to customers at the IPO price of $22.00 per share. To receive the allocations at $22.00, the defendant 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 Company share price up to artificially high levels. This artificial price in flation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $22.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $158.00 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectus distributed to investors and the registration statement filed with the SEC in order to gain regulatory approval for the Cobalt Networks offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact Lovell and Stewart by Phone: 212.608.1900 or visit the firm's Website: http://www.lovellstewart.com DJ ORTHOPEDICS: Milberg Weiss Commences Securities Suit in S.D. CA ------------------------------------------------------------------ Milberg Weiss Bershad Hynes and Lerach LLP initiated a securities class action in the United States District Court for the Southern District of California on behalf of purchasers of DJ Orthopedics, Inc. (NYSE:DJO) stock pursuant to the DJ Orthopedics November 15, 2001 Initial Public Offering. The complaint charges the Company, certain of its officers and directors and its underwriters with violations of the Securities Act of 1933. On November 15, 2001, the Company completed an IPO of 9 million shares of stock pursuant to a registration statement/prospectus. The offering was priced at $17 per share for total proceeds of $153 million. In the prospectus, the defendants represented that the Company was dependent, in part, on international sales to fuel its revenue growth and profitability. The complaint alleges that the statements in the prospectus regarding the Company's international sales and the accompanying risk disclosures regarding its ability to generate such growth were false and misleading and contained material omissions when made. In actuality, by the time of the IPO, the Company had known that its stock price of $17 reflected the defendants' contention that it would achieve its 4th Quarter 2001 earnings estimates. Prior to the IPO, defendants knew that the Company would not achieve its earnings estimates. Moreover, this information was disclosed to certain of the underwriting defendants' sales people who, as a result of the change in the Company's projections, declined to support or otherwise purchase the shares in the "after market." Thus, contrary to the representations in the prospectus and obligations of the defendants, the prospectus omitted to state material facts, rendering it false and misleading. Public investors who purchased shares traceable to the IPO based on the Company's representations, paying $17 per share for stock, have suffered damages. For more information, contact William Lerach or Darren Robbins by Phone: 800.449.4900 or by E-mail: wsl@milberg.com or visit the firm's Website: http://www.milberg.com/djorthopedics/. ENRON CORPORATION: Milberg Weiss Initiates Securities Suit in S.D. TX --------------------------------------------------------------------- Milberg Weiss Bershad Hynes and Lerach LLP initiated a securities class action in the United States District Court for the Southern District of Texas on behalf of purchasers of Enron Corporation (NYSE:ENE) publicly traded securities during the period between October 19, 1998 and November 27, 2001 against the Company's officers and directors and the Company's auditors. The suit charges certain of the Company's officers and directors and its auditors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. The suit alleges that during the class period, defendants engaged in massive insider trading while issuing false financial statements and making false and misleading statements about the Company's purportedly "record" results and strong operating performance. As a result of these false statements, the Company's stock traded as high as $90.75, allowing defendants to sell 17.3 million of their own shares for proceeds of $1.1 billion. Beginning in late 2001, it was revealed that the Company would be incurring losses of $1 billion for certain of its divisions and that it would be restating its results for 1997 - 2000, and the first two quarters of 2001 to correct for errors which had inflated its net income by $591 million for those years. The impact of the restatement was enormous. Upon these disclosures, the Company's stock dropped to as low as $8.20 before closing at $8.41 on November 8, 2001, some 91% below the class period high of $90.75. Then, on November 28, 2001, it was revealed that the attempted acquisition of the Company by Dynegy Inc. would be scuttled. Thereafter, Company debt was cut to junk bond status and its stock dropped to just $0.26 per share. Then, on December 2, 2001, the Company filed for Chapter 11 bankruptcy protection. For more information, contact William Lerach or Darren Robbins by Phone: 800-449-4900 or by E-mail: wsl@milberg.com or Steven G. Schulman or Samuel H. Rudman by Phone: 800.320.5081 or by E-mail: enroncase@milbergNY.com or visit the firm's Website: http://www.milberg.com/enroncorp/. FLORIDA: Federal Judge Throws Out Suit Against State Foster-Care System ----------------------------------------------------------------------- US District Judge Federico Moreno dismissed with prejudice a class action against the state of Florida and the Department of Children and Families (DCF) clamoring for changes in the state's foster care system. The ruling was a huge blow for advocates who have worked to create changes in the system for years. According to a Miami Herald report, the foster-care system has repeatedly been criticized as "chaotic, insensitive and woefully underfunded." Many lawyers and advocates assert that youths are better off remaining with abusive or neglectful parents than being placed in the system. Florida lawyer Karen Gievers initiated the suit in June 2000 on behalf of all children in state care in Florida, describing the system as being the worst "abuser, neglecter and exploiter of children in Florida". Ms. Gievers said she had earlier settled a similar lawsuit with the state a few years ago, only to find out that the DCF failed to implement the changes agreed upon. Judge Moreno's ruling is the second setback in her efforts to improve the foster care system. In his ruling, Judge Moreno dismissed the most significant portions of the case purely on procedural grounds, instead of on the merits of the case - an extreme rarity in cases like this. According to a Miami Herald report, Judge Moreno cited what he said might become an "unseemly conflict between state and federal judges" if a federal judge, ruling in a class action, were to order a state court judge to act in a certain way. Though the suit did not seek such a remedy, Moreno feared it might eventually occur. He wrote "In suits for prospective injunctive relief, courts have been troubled by the specter of an ongoing scrutiny of state judicial proceedings, even those that are not yet pending, and of having to enforce a federal injunction against state judicial officers." Paul Hancock, Deputy Attorney General, told the Herald the ruling sounded like "an important victory for the state, and the state has tried very hard to provide quality foster-care services." He supported DCF Secretary Kathleen Kearney's efforts saying she "worked very hard since she came to the position to effect reform." Children's advocates are dismayed by the ruling. Carolyn Salisbury, one of the lawyers helping with the case, criticized Judge Moreno's ruling as "flawed" because it assumed children can be protected by individual dependency court judges, even though the overwhelming majority of foster children are not represented by lawyers. Ms. Salisbury added that the group had not yet mapped out a strategy for overcoming Moreno's decision. One avenue the group will certainly consider is a similar lawsuit in state court, she said. "We're waiting to read the full ruling...After that is done we can formulate our next step in order to best safeguard children who remain at risk in the Florida foster care system." FLORIDA: Certification of Sexual Harrasment, Bias Suit V Union Affirmed ----------------------------------------------------------------------- Jacksonville's female dock workers prevailed as the 1st Circuit Court of Appeals upheld class certification for a suit charging the International Longshoreman's Association, its Jacksonville chapter, and five shipping and cargo companies with sexual discrimination and harassment. The certification will pave the way for a $1 million settlement with the shipping and cargo companies. Workers Trevaine Howard and Vonceil Fisher filed the suit along with nine other women who signed affidavits and declarations for the lawsuit, alleging they were discriminated against and sexually harassed as soon as they showed up at the Longshoremen union hall on East 21st Street looking for work. Plaintiffs testified they were told they can't do the job and routinely are subjected to lewd comments and behavior. They also alleged they have been propositioned, promised work in exchange for sex and been exposed to men urinating off the docks, according to a Jacksonville.com. One of the women, Janelle Spaulding, who testified last year that "The men down at the union hall, including union officials...laughed at women who tried to get work and said sexually explicit things...I have been fondled and touched in inappropriate places while trying to get work." Ms. Fisher said that she had been going to the union hall since 1983, but was unsuccessful in getting enough work to achieve some seniority. She alleges that even her two sons, who both started working in the docks in the late 1990s, have bypassed her on the seniority list, which makes workers eligible for first preference on jobs. Ms. Howard adds that the harassment and discrimination intensified since the filing of the suit, "...we were degraded, we were separated, we were kicked in the butt...It's not fair. If you aren't in the clique...then you are no use to them at all." The union and Local Chapter Deep Sea 1408 denied the charges, saying they haven't discriminated and were not responsible for sexual harassment occurring on the docks. They have also decided not to settle with the plaintiffs. George Spencer, the Local's Secretary and Financial Officer, told Jacksonville.com the union strives to be "fair and equal at all times" and really goes "out of [its] way to help the women." Union attorney Daniel Shaughnessy said he will continue to fight class action status for the case. He said he wasn't surprised by the appellate decision. The suit could cost the union a total of $26 million in lost wages and benefits, according to the plaintiffs' attorney Stephen Gallagher. The plaintiffs also seek equal access to work and an equal employment representative on the docks. Edward Birk, who also represents Fisher and Howard, said the evidence shows the employers aren't alone in harassing and discriminating against women, saying "The union is the waterfront and controls everything that happens on the waterfront." Mr. Birk said their next step was to ask Circuit Judge Charles Mitchell to tentatively approve the settlements so that a notice can be published advising women of the class. Union and shipping company officials estimate about 150 women will be affected, but "we think that's a minimum estimate," Birk told Jacksonville.com. FLORIDA POWER: Supreme Court Reviewing Age-Bias Suit Claims ----------------------------------------------------------- A pivotal issue faces the Supreme Court in its review of the class action suit filed by fired employees of the Florida Power Corporation alleging discrimination. Is a 1967 law, the Age Discrimination in Employment Act (ADEA), which bars on-the-job age discrimination, allow people to sue under the premise that an employer's action had a "disparate impact" on older workers?, according to the Baton Rouge Advocate. Earlier, the Supreme Court decided to review the claims of more than 100 former employees fired by Florida Power Corporation who had filed a class-action lawsuit charging that more than 70 percent of the employees laid off during reorganizations in the early 1990s were age 40 or older. The former employees claimed that the Company fired them because it wanted to change its image and reduce salary and pension costs. Wanda Adams and other former workers sued in 1999, but their claims never reached trial. A federal court said it needed clarification on whether the former employees could bring such a suit - a suit contending that the impact of an action by an employer fell harder on a particular group of employees, and in this case, older employees. Hundreds of such suits are filed each year, claiming discrimination, based on "disparate impact," in hiring, pay, benefits, promotion and firing, but a majority of the federal appeals courts have ruled that ADEA does not allow such suits. The Supreme Court said that with layoffs expected at many firms hit by recession, it was going to decide if older workers may sue over cutbacks that seem to hit them the hardest. A ruling against the workers would mean that to win future age-bias cases, older workers would have to prove that employers intended to discriminate. That is often a harder case to make than the one at issue in the Florida Power lawsuit, which claims that layoffs that seemed evenhanded really fell disproportionately on older workers. A Supreme Court ruling will resolve the split among the lower courts. In April, the Supreme Court limited similar lawsuits under the landmark 1964 Civil Rights Act. Justice Antonin Scalia wrote for the majority in that 5-4 decision that it is a given that people have the right to sue over alleged intentional, state-sponsored discrimination. What they do not have the right to do, Scalia said, is challenge state decisions, such as Alabama's policy of offering driver's tests only in English, on the theory that such requirements affect minorities more than other applicants. GIGAMEDIA LIMITED: Stull Stull Commences Securities Suit in S.D. NY ------------------------------------------------------------------- Stull Stull and Brody initiated a securities class action on behalf of purchasers of the common stock of GigaMedia Limited (NASDAQ:GIGM) between February 18, 2000 and December 6, 2000, inclusive in the United States District Court, Southern District of New York against the Company, certain of its officers and its underwriters. The suit alleges 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. In February 2000, the Company commenced an initial public offering of 8.83 million of its shares of common stock at an offering price of $27 per share. In connection therewith, the Company filed a registration statement, which incorporated a 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 underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriters allocated to those investors material portions of the restricted number of Company shares issued in connection with the IPO; and (ii) the underwriters had entered into agreements with customers whereby the underwriters agreed to allocate shares to those customers in the Company IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, contact Tzivia Brody by Mail: 6 East 45th Street, New York, NY 10017 by Phone: 1.800.337.4983 (toll free) or 1.212.687.7230 by Fax: 1.212.490.2022 or by E-mail: SSBNY@aol.com INDIAN FUNDS: Alarming System Vulnerability Sparks Net Disconnection -------------------------------------------------------------------- Federal Judge Royce C. Lamberth ordered the accounting system used by the Interior Department to allocate $300 million a year in rents and royalties for Indians be disconnected from the Internet. A report revealed that the system had major security gaps that could allow computer "hackers" to steal money and destroy records. Judge Lamberth said that the Department's system had no firewalls to prevent intrusions, systems to detect "hackers", or auditing methods to determine if account information had been manipulated. He immediately ordered any computer that could access the system to be disconnected from the Internet to safeguard the trust money. Alan Balaran, a Special Master appointed by Judge Lamberth, presented his report stating that he hired an outside computer-security firm, New York-based Predictive Systems Inc., to conduct a series of "penetration tests" to check the security of the system. The tests showed computer "hackers" could easily penetrate the unprotected system, as parts of it were not protected by firewalls or passwords. Through the Internet, the "hackers" could break many of the passwords protecting Indian accounts by using a tool called a "cracker." An Interior official dismissed the report. To prove the official wrong, Mr. Balaran ordered Predictive Systems in August to "hack" into the system again, this time to switch an existing account to his name. The ploy succeeded and was undetected, he said. The report further recommended that Judge Lamberth take over the accounting systems to prevent loss of information "crucial to the welfare" of roughly 280,000 Indians served by the system. He noted that during the past 15 years there have been 30 reports from Congress, Interior and outside firms suggesting the system was malfunctioning. Mr. Balaran added that Indian trust-fund data is "no more secure today than it was 10 years ago" when the Interior Department set out to "reform" the accounting system. The report, unsealed due to a motion by lawyers for The Wall Street Journal, will be used by Indian plaintiffs in their class-action lawsuit to support their claim that the Court should take over operation of the trust funds. "This means that the individual Indian trust system should be shut down until it's fixed," said Dennis Gingold, lawyer for the Indians. This creates new problems for the Fund, on top of the many other problems it faces, such as: (1) billions of dollars in royalties that cannot be located, possibly lost, stolen or uncollected; (2) a Secretary of the Interior who, tasked to "fix" the trust fund's accounting system so that loss of funds will not occur in the future, instead may be held in contempt of court because of her inability to show the court any real movement or progress in the development of a new accounting system; and (3) 300,000 Indians who have had to bring a class action lawsuit in order to bring justice to bear upon the malfunctioning of a system that is still robbing them of their funds. Congress set up the trust funds in the late 19th century to function as a banking system for rents, royalties and other income owed to individual Indians for use of their land. Advocates for the Indians cite the continuing magnitude of problems with the trust funds to support Indian requests that Interior Secretary Gale Norton and other Interior Department officials be held in contempt of court. Judge Lamberth, who has repeatedly ordered the Interior Department to fix the accounting system, will begin a trial over the contempt allegations next week. Lawyers for the Interior Department have argued that a judicial takeover of the trust funds would violate the "separation of powers" clause of the Constitution. Spokesmen for Ms. Norton have asserted that this year she has "moved on several fronts" to improve the system, which has experienced decades of complaints and has lost a substantial number of Indian records. INSWEB CORPORATION: Lovell Stewart Initiates Securities Suit in S.D. NY ----------------------------------------------------------------------- Lovell & Stewart, LLP commenced a securities class action on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of InsWeb Corporation (NasdaqNM: INSW) between July 22, 1999 and December 6, 2000, inclusive. The complaint was lodged against the Company, certain of its officers and directors, and underwriters: (1) The Goldman Sachs Group, Inc., (2) FleetBoston Robertson Stephens, Inc. and (3) Donaldson, Lufkin & Jenrette Securities Corporation The suit asserts claims under Section 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder. It is pending in the U.S. District Court for the Southern District of New York. The suit alleges that the defendants violated the federal securities laws by issuing and selling Company stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, defendants allocated Company shares to customers at the IPO price of $17.00 per share. To receive the allocations at $17.00, the defendant 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 share price rocketed upward was intended to drive Company share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $17.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $44.00 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectus distributed to investors and the registration statement filed with the SEC in order to gain regulatory approval for the offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact Lovell and Stewart LLP by Phone: 212.608.1900 or visit the firm's Website: http://www.lovellstewart.com INTERNET INITIATIVE: Lovell Stewart Lodges Securities Suit in S.D. NY --------------------------------------------------------------------- Lovell & Stewart LLP commenced a securities class action on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired American Depositary Shares (ADS) representing shares of the common stock of Internet Initiative Japan, Inc. (NasdaqNM: IIJI) between August 3, 1999 and December 6, 2000, inclusive. The case was filed in the United States District Court for the Southern District of New York. The suit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder. It names as defendants, the Company, certain of its officers and directors at the time of the IPO and underwriters Goldman Sachs Group, Inc. and Morgan Stanley Dean Witter, Inc. The suit alleges that the Company and certain of its officers and directors at the time of its IPO violated the federal securities laws by issuing and selling Company ADSs pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, the underwriters allocated Company ADS to customers at the IPO price of $23.00 per ADS. To receive the allocations at $23.00, the defendant underwriters' brokerage customers had to agree to purchase additional ADS in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of the Company's ADSs rocketed upward was intended to drive ADS price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying Company ADS at the $23.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $32.00 during its first day of trading. In the week following the offering, the complaint alleges, the underwriter defendants' wrongful market manipulation pushed the price of Company ADSs even higher, reaching an intra-day peak of $61.50 per ADS on August 13, 1999. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO ADS allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectus distributed to investors and the registration statement filed with the SEC in order to gain regulatory approval for the Internet Initiative Japan offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact Lovell and Stewart by Phone: 212.608.1900 or visit the firm's Website: http://www.lovellstewart.com KENTUCKY: School Board Settles School "Sports Equality" Suit ------------------------------------------------------------ The Boone County School Board has reached a tentative settlement in a class action filed in the US District Court in Covington, Kentucky by parents asserting claims under federal Title IX guidelines, which require equity in sports between males and females. The Egans filed the lawsuit last year, together with two other couples, Raleigh and Barbara Lawrence and David and Lisa Gatewood. The growth of fast-pitch softball led to the lawsuit, school board attorney Gerald Dursing told the Kentucky Post. Usually, he said, most Title IX lawsuits involve college sports, but because fast-pitch softball, which began in most schools about three to five years ago, can lead to college scholarships, Olympic tryouts and other benefits, girls have been demanding the same treatment as boys' baseball teams. The proposed settlement is the second in the case. The plaintiffs rejected the first proposal, saying it was not enough to address their concerns that girls' sports were getting short-changed at Boone County High School, according to the Kentucky Post. Under the first settlement, the School Board agreed to build the girls a softball field at the nearby Sports of All Sorts complex. The plaintiffs opposed this, saying Gene Daniels, owner of the complex, would have control of the scheduling in the summer, in return for upkeep of the field during that time. According to Attorney Greg Butrum, lawyer for the plaintiffs, this would mean that the school could not run a summer program that could bring more girls into the sport. The plaintiffs also rejected the settlement, after first approving it, calling it a consent decree. They said they wanted a settlement. According to a Kentucky Post report, Judge William O. Bertelsman said "The class is now opposed to the people who organized it...I've never heard of this happening before." After two hours of testimony in Federal Court early this week, attorneys for the plaintiffs and for the school board inked a second tentative settlement that would allow the girls' softball team to play and practice on a field being built at Sports of All Sorts in Florence. It will give the school control of the field throughout the school year and for most of the summer. The new settlement gives the girls' teams total use of the field until 2 pm every summer day, except from June 25 to July 9, when state rules prohibit schools from organizing any play for their softball teams. Mr. Butrum said the settlement"...basically splits the difference...The Egans are willing to compromise on some points." Mr. Dusing said second the proposal was "just a matter of working out the scheduling" and he was confident the Boone County Board of Education would approve it. Boone County School Superintendent Brian Blavant expressed satisfaction with the settlement, telling the Kentucky Post "I'm glad that we can now go ahead and do what's best for the kids." LANZO CONSTRUCTION: Sued By IL Residents After Rains Cause Flooding ------------------------------------------------------------------- Residents of St. Clair Shores have commenced a class action lawsuit in Macomb County Circuit Court against Roseville, Illinois-based Lanzo Construction Corporation, after heavy rainfalls overwhelmed the City's sewers and flooded basements in several houses last November 29 and 30. Although the suit names only two plaintiffs so far, 140 reports of flooding have already reached city officials. Angry residents converged on the St. Clair Shores City Council meeting about the incident, while some had already retained lawyers from Macuga & Liddle of Detroit, a firm widely known for suing local governments in flood-damage cases, according to the Macomb Daily. The suit asserts, "(W)hen it (Lanzo) improperly constructed, maintained, operated, engineered and/or designed the sewer improvement project ...it knew, or should have known, that such actions would cause (the residents') property to be invaded by obnoxious odors and water." Attorney Peter W. Macuga says that there have been "a substantial number of phone calls from the affected neighbors...We haven't yet pinned down any specific geographical area, but it seems to be a large problem." Mark Wollenweber, City Manager, said he couldn't yet comment on the suit. He told the Macomb Daily "I'm still waiting for an engineer's report. We're still in the process of looking at everything that happened and determining who's responsible...But certainly nothing surprises me from this law firm." The Macomb Daily couldn't reach officials at Lanzo for comment late Tuesday. The firm is one of several handling parts of a $63 million sewer renovation project that should take four years to finish. LEXMARK INTERNATIONAL: Cauley Geller Lodges Securities Suit in E.D. KY ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Eastern District of Kentucky on behalf of purchasers of Lexmark International, Inc. (NYSE:LXK) common stock during the period between March 20, 2001 and October 22, 2001, inclusive against the Company and certain of its officers and directors. The suit charges the defendants with issuing a series of material misrepresentations to the market, thereby artificially inflating the price of Company stock. Specifically, the complaint alleges that throughout the class period, defendants made highly positive statements regarding the Company's financial results, including strong sales and growth of its printers. Despite unprecedented competition in the industry, the Company seemed to be immune from market conditions, reporting quarter after quarter of strong financial growth. Unbeknownst to the investing public, the Company was plagued with an increasing backlog of unmarketable inventory which defendants failed to properly account for in iots publicly reported financial results, causing the its financial results to be overstated by at least $25 million during the class period. The suit alleges that by failing to take a charge to earnings for the unmarketable inventory, defendants and other Company insiders were able to divest themselves of thousands of shares at prices well above $60 per share, generating proceeds of over $8,000,000. On October 22, 2001, defendants finally revealed the truth, indicating that the Company would record a $25 to $35 million inventory write-down in the fourth quarter of fiscal year 2001, and that it would have to undergo a major restructuring in order to maintain its competitiveness. In addition, instead of generating between 70-80 cents in earnings per share for the fourth quarter of 2001, a figure defendants repeatedly emphasized the Company would reach, defendants were forced to drastically revise its fourth quarter earnings' guidance. As revealed on October 22, 2001, defendants expected only 40-50 cents in earnings per share for the fourth quarter of 2001, a far cry from what analysts and the investing public were led to expect. In response to the unexpected news, Company stock declined by over 11% to close at $44.77 per share, on extraordinarily high trading volume. For more information, contact Jackie Addison, Sue Null or Shelly Nicholson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1.888.551.9944 by E-mail: info@classlawyer.com or visit the firm's Website: http://www.classlawyer.com LEXMARK INTERNATIONAL: Schiffrin Barroway Files Securities Suit in KY --------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action in the United States District Court for the Eastern District of Kentucky, Lexington Division on behalf of all purchasers of the common stock of Lexmark International, Inc. (NYSE:LXK) from March 20, 2001 through October 22, 2001, inclusive. The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, throughout the class period, defendants made highly positive statements regarding the Company's financial results, including strong sales and growth of its printers. Despite unprecedented competition in the industry, the Company seemed to be immune from market conditions, reporting quarter after quarter of strong financial growth. Unbeknownst to the investing public, the Company was plagued with an increasing backlog of unmarketable inventory which defendants failed to properly account for in its publicly reported financial results, causing the Company's financial results to be overstated by at least $25 million during the class period. By failing to take a charge to earnings for the unmarketable inventory, defendants and other Company insiders were able to divest themselves of thousands of shares at prices well above $60 per share, generating proceeds of over $8,000,000. In October 2001, defendants finally revealed the truth, indicating that the Company would record a $25 to $35 million inventory write-down in the fourth quarter of fiscal year 2001, and that it would have to undergo a major restructuring in order to maintain its competitiveness. In addition, instead of generating between 70-80 cents in earnings per share for the fourth quarter of 2001, a figure defendants repeatedly emphasized the Company would reach, defendants were forced to drastically revise its fourth quarter earnings' guidance. As revealed on October 22, 2001, defendants expected only 40-50 cents in earnings per share for the fourth quarter of 2001 - a far cry from what analysts and the investing public were led to expect. In response to the unexpected news, Company stock declined by over 11% to close at $44.77 per share, on extraordinarily high trading volume. For more information, 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 MICROSOFT CORPORATION: FL Consumers To Continue Suit Despite Settlement ----------------------------------------------------------------------- Haggard Parks Haggard and Bologna PC, a group representing Florida consumers who say they were overcharged by Microsoft Corporation, will move forward with their objection to a proposed billion-dollar antitrust settlement of class-action lawsuits. The firm represents Microsoft customers in a suit pending in the 11th Judicial Circuit, Miami-Dade, Florida entitled In RE: Florida Microsoft Antitrust Litigation. The 39-page civil lawsuit is independent from the pending criminal antitrust suit filed by Florida Attorney General Bob Butterworth against the Company in federal court alleging monopolistic practices. The action was filed on behalf of consumers who purchased Microsoft Intel-compatible PC operating systems (OS) and Windows 95 and later compatible Word and Excel "applications" software products between Nov. 16, 1995 and the filing of the amended complaint in 1999. Robert L. Parks, lead Florida counsel in the suit, said in a press statement, "This settlement does nothing for Florida consumers but deny them access to the courts...We will file an objection as far as it affects Florida consumers, later this week. We are trying to get other states to join us in our objections." Under the proposal unveiled in late November, the Company and some plaintiffs agreed the company would provide more than $1 billion worth of software, refurbished personal computers and other resources to more than 12,500 of the nation's poorest schools. "This settlement actually costs Microsoft very little," said Mr. Parks. Critics have said Microsoft actually has about $36 billion cash on hand and the settlement would cost the company $375 million after taxes. Critics also say the settlement actually encourages monopolistic behavior. "This settlement puts the fox in the hen house," said attorney Jim Thompson of Birmingham, Alabama, who is representing consumers together with Mr. Parks and Jere White of Birmingham. "The main area of the marketplace where Microsoft is not dominant is in the field of education. This settlement will extend its monopoly into this area by giving their software to the schools and thereby squeezing out Apple and any semblance of competition." Florida, eight other states and the District of Columbia have not signed onto the settlement and have until this Friday to state their objections and proposed remedies. The other eight states are California, Kansas, West Virginia, Massachusetts, Minnesota, Connecticut, Iowa and Utah. For more information, contact Robert L. Parks by Mail: 330 Alhambra Circle, Coral Gable, Florida 33134 by Phone: 305.446.5700 by Fax: 305.446.1154 by E-mail: rlp@haggardparks.com or visit the firm's Website: http://www.haggardparks.com NEXTCARD INC.: Schatz Nobel Lodges Securities Suit in N.D. California --------------------------------------------------------------------- Schatz and Nobel PC launched a securities class action in the United States District Court for the Northern District of California on behalf of all persons who purchased stock or options of NextCard, Inc. (NASDAQ:NXCD) between March 30, 2000 and October 30, 2001, inclusive against the Company and several members of its top management The Complaint alleges that the defendants misled the investing public during the class period by representing that: (1) its wholly owned subsidiary, NextBank, N.A., was "well capitalized" according to guidelines adopted by the U.S. Office of the Comptroller of the Currency (OCC); (2) it had adequate reserves against loan losses; and (3) it would make a profit by the fourth quarter of fiscal year 2001. The suit also alleges that members of senior management sold almost $9 million of their personal holdings during the class period, while the Company's share price was artificially inflated. However, on October 31, 2001, the Company revealed that federal regulators determined that NextBank's reserves were inadequate, that its credit losses had been improperly categorized as fraud losses, and that NextBank was now considered "significantly undercapitalized" according to the OCC's capitalization regulations. That day, as a result of this news, Company stock dropped below $0.85 per share, before closing at $0.87 per share, which is 95% lower than its class period high of over $16.00 per share. For more information, contact Andrew M. Schatz, Patrick A. Klingman, or Wayne T. Boulton by Phone: 800.797.5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. PROVIDIAN FINANCIAL: Schatz Nobel Commences Securities Suit in N.D. CA ---------------------------------------------------------------------- Schatz and Nobel PC initiated a securities class action in the United States District Court for the Northern District of California on behalf of all persons who purchased stock or options of Providian Financial Corporation (NYSE:PVN) between June 6, 2001 and October 18, 2001, inclusive The suit alleges that the Company, a consumer lender, and three of its top officers misled the investing public during the class period because, by changing the way in which bankruptcy losses were processed, recognition of over $30 million of charge-offs was deferred until the second quarter of fiscal year 2001. The way in which this change was implemented violated generally accepted accounting principles and SEC rules and permitted defendants to understate the Company's net charge-off rate and perpetuate the representation of its continued earnings per share growth. The suit also alleges that the corporate officers sold almost $22 million of their personal holdings during the class period, while the Company's share price was artificially inflated. Ultimately, on October 18, 2001, the Company was forced to admit that it would not post any earnings per share growth. On this news, the Company's share price fell to less than $5.00 per share, a drop of over 90% from its class period high of $59.95 per share. For more information, contact Andrew M. Schatz, Patrick A. Klingman or Wayne T. Boulton by Phone: 800.797.5499 by E-mail: sn06106@aol.com or visit the firm's Website: http://www.snlaw.net. REGENT COMMUNICATIONS: Milberg Weiss Files Securities Suit in S.D. NY --------------------------------------------------------------------- Milberg Weiss Bershad Hynes and Lerach commenced a securities class action on behalf of purchasers of the securities of Regent Communications, Inc. (NASDAQ:RGCI) between January 25, 2000 and December 6, 2000, inclusive in the United States District Court, Southern District of New York against the Company and: (1) Terry S. Jacobs, CEO and Chairman, (2) William L. Stakelin, COO and director, (3) Anthony A. Vasconcellos, CFO, (4) Morgan Stanley & Co. Incorporated, (5) Bear, Stearns & Co. Inc. and (6) Credit Suisse First Boston Corporation The suit 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. In January 2000, the Company commenced an initial public offering of 16,000,000 of its shares of common stock, at an offering price of $8.50 per share. In connection therewith, the Company filed a registration statement, which incorporated a 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 Company shares issued in connection with the IPO; and (ii) the underwriter defendants had entered into agreements with customers whereby the underwriter defendants agreed to allocate Company shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, 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 or visit the firm's Website: http://www.milberg.com REZULIN LITIGATION: Judge Refuses To Grant Certification To WV Suit ------------------------------------------------------------------- The Circuit Court of Raleigh County, West Virginia denied class certification in a lawsuit against pharmaceutical giant Pfizer, Inc. (NYSE:PFE) filed by five named plaintiffs on behalf of some 5,000 patients who had been treated with the Company's diabetes drug Rezulin in West Virginia. The suit asserts claims for reimbursement under the State's Consumer Protection Act and a medical monitoring program to diagnose alleged possible "latent" liver injuries or injuries that might develop after the patient had stopped taking Rezulin, which the Company withdrew from the market in March 2000. Based upon a full evidentiary record, Judge John A. Hutchison rejected plaintiffs' proposal to certify the class. In a 55-page decision, Judge Hutchison found: (1) "...that there are no epidemiological studies which show that Rezulin can cause a latent injury months or years after it was Taken;" (2) that "plaintiffs have not identified a single person who has developed a Rezulin-related injury (more than 16 months) after the drug was discontinued;" (3) that "with the exception of the relatively few patients who sustained an acute liver injury while taking Rezulin, there is no evidence that Rezulin caused any injury to patients" Paul S. Miller, Company Executive Vice President and general counsel, said in a statement that the Company "is pleased with this decision...We are hopeful that courts in other jurisdictions will consider favorably Judge Hutchison's careful, thorough analysis and conclusions." Mr. Miller added that, considering its insurance and reserves, the company is of the opinion that the Rezulin litigation should not have a material adverse effect on the financial position or results of the company. STARMEDIA NETWORK: Weiss Yourman Commences Securities Suit in S.D. NY --------------------------------------------------------------------- Weiss and Yourman initiated a securities class action against StarMedia Network, Inc. (NASDAQ:STRM) and certain of its officers and directors in the United States District Court for the Southern District of New York, on behalf of purchasers of Company securities between April 11, 2000 and November 19, 2001. The suit charges the defendants with violations of the Securities Exchange Act of 1934 and alleges that the defendants failed to disclose material adverse information and misrepresented the truth about the Company and caused plaintiff and other members of the class to purchase Company stock at artificially inflated prices. For more information, contact David C. Katz, James E. Tullman or Mark D. Smilow by Mail: The French Building, 551 Fifth Avenue, Suite 1600, New York, NY 10176 by Phone: 888.593.4771 or 212.682.3025 or by E-mail: info@wynyc.com THESTREET.COM: Lovell Stewart Commences Securities Suit in S.D. NY ------------------------------------------------------------------ Lovell & Stewart LLP initiated a securities class action on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of TheStreet.com, Inc. (NasdaqNM: TSCM) between May 10, 1999 and December 6, 2000, inclusive. It was lodged in the United States District Court for the Southern District of New York. The suit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and names as defendants the Company, certain of its officers and directors at the time of its IPO, and underwriters: (1) The Goldman Sachs Group, Inc., (2) Chase H&Q (formerly Hambrecht & Quist LLC), (3) Thomas Weisel Partners LLC, (4) FleetBoston Robertson Stephens, Inc. and (5) Merrill Lynch, Pierce, Fenner & Smith, Incorporated The suit charges the defendants with violating federal securities laws by issuing and selling Company stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, defendants allocated Company shares to customers at the IPO price of $19.00 per share. To receive the allocations at $19.00, the defendant 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 Company share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying Company stock at the $19.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $71.25 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectus distributed to investors and the registration statement filed with the SEC in order to gain regulatory approval for the offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact Lovell and Stewart LLP by Phone: 212. 608.1900 or visit the firm's Website: http://www.lovellstewart.com VANTAGEMED CORPORATION: Reaches Pact To Settle Securities Suit in CA -------------------------------------------------------------------- Health information systems provider VantageMed Corporation (NASDAQ:VMDC) has reached an agreement to settle the consolidated securities class action pending in the US District Court for the Eastern District of California on behalf of all purchasers of the Company's stock pursuant to its February 15,2000 IPO. The consolidated suit consists of several actions filed beginning March 2000, alleging that the Company and certain directors and officers violated the Securities Act of 1933 and the Securities Exchange Act of 1934. VantageMed is a software developer. More than two-thirds of the company's sales come from data conversion, maintenance, and other services revolving around its product suite, which handles such tasks as patient scheduling, billing, claims filing, and insurance verification. VIRATA CORPORATION: Schiffrin Barroway Files Securities Suit in S.D. NY ----------------------------------------------------------------------- Schiffrin and Barroway LLP initiated a securities class action on behalf of purchasers of the common stock of Virata Corp. (NASDAQ:VRTA) between November 16, 1999 and December 6, 2000, inclusive in the United States District Court, Southern District of New York against: (1) Credit Suisse First Boston Corporation, (2) Warburg Dillon Read LLC, (3) Thomas Weisel Partners LLC, (4) Banc of America Securities LLC, (5) FleetBoston Robertson Stephens Inc., (6) Dain Rauscher Wessels, (7) Morgan Stanley & Co. Incorporated, and (8) US Bancorp Piper Jaffray The suit alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In November 1999, the Company commenced an initial public offering of 5,000,000 of its shares of common stock, at an offering price of $14 per share. In connection therewith, the Company filed a registration statement, which incorporated a prospectus with the SEC. The complaint further alleges that the pwas materially false and misleading because it failed to disclose, among other things, that: (i) defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which defendants allocated to those investors material portions of the restricted number of shares issued in connection with the IPO; and (ii) defendants had entered into agreements with customers whereby defendants agreed to allocate shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, 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 WASHINGTON: Foster Care Declared "Inadequate", Court To Oversee Program ----------------------------------------------------------------------- A jury in Whatcom County, Washington, has found the state's Department of Social and Health Services failed to provide adequate support for children in foster care, the Associated Press recently reported. Judge David A. Nichols of the Superior Court will now oversee state efforts to improve the care and support it provides. Attorney Tim Farris, who filed the class action in 1998 on behalf of 3,000 children, said the plaintiffs' attorneys will be presenting Judge Nichols with a proposed set of remedies for the statewide system. Judge Nichols will then oversee the department's efforts to correct the system. The lawsuit had accused the department of violating state law by, among other things, shuttling the children from home to home and by failing to provide adequate mental-health services for them or proper training and support for foster parents. Damage claims in the case were settled in September, when the state agreed to pay $100,000, to each of the 13 children. The money will be held in trust for each child until he or she reaches age 30, though court-appointed trustees may distribute some of it earlier if a child needs money for health care, shelter, clothing or education. After a seven-week trial, "the jury found the conditions children are living in and the way they're being treated by the state are unconstitutional," said Mr. Farris. "The jury also found the children are being harmed by these unconstitutional violations." Mr. Farris added that: (1) the children were sleeping in the department's offices; (2) they were placed in the bedrooms of sexual predators; (3) they were moved from home to home, and one child was moved 48 times, he said. The state maintained the Agency was already moving to correct problems with the foster-care system. "We believe we have very good grounds for appeal and we'll be appealing," said Dennis Braddock, Secretary of the Department of Social and Health Services. "I think there were a number of irregularities in the judge's decision and instructions." WORLD WRESTLING: Lovell Stewart Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Lovell & Stewart LLP initiated a securities class action lawsuit on December 5, 2001 on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of World Wrestling Federation Entertainment, Inc. (NasdaqNM: WWF) between October 18, 1999 and December 6, 2000, inclusive. The suit was filed in the United States District Court for the Southern District of New York. The lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and names as defendants the Company, certain of its officers and directors at the time of its IPO, and underwriters: (1) Bear, Stearns & Co., Inc., (2) Merrill Lynch, Pierce, Fenner & Smith, Incorporated, (3) Credit Suisse First Boston Corporation, (4) Wit Capital Corporation, (5) Donaldson, Lufkin & Jenrette Securities Corporation and (6) Chase H&Q (formerly Hambrecht & Quist) The suit alleges that the defendants violated the federal securities laws by issuing and selling Company stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, the underwriter defendants allocated shares to customers at the IPO price of $17.00 per share. To receive the allocations at $17.00, the defendant 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 stock price rocketed upward was intended to drive share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying stock at the $17.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $34.00 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the prospectus distributed to investors and the registration statement filed with the SEC in order to gain regulatory approval for the offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and "laddering" scheme discussed above. For more information, contact Lovell and Stewart by Phone: 212.608.1900 or visit the firm's Website: http://www.lovellstewart.com XO COMMUNICATIONS: Finkelstein Thompson Commences Securities Suit in VA ----------------------------------------------------------------------- Finkelstein, Thompson & Loughran filed a securities fraud class action in the United States District Court for the Eastern District of Virginia, on behalf of purchasers of XO Communications, Inc. (NASDAQ:XOXO) common stock between April 4, 2001 and November 29, 2001, inclusive against the Company and: (1) Daniel F. Akerson, Chief Executive Officer and Chairman of the Board of Directors, (2) Nathaniel A. Davis, President, Chief Operating Officer and Director, (3) Craig O. McCaw, the Company's founder, controlling shareholder, and Director The suit charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by, among other things, issuing false and misleading statements regarding the Company's financial condition as well as its present and future business operations. In particular, the suit alleges that defendants misled the investing public concerning the Company's ability to finance its business operations until it becomes cash-flow positive. Throughout the class period the defendants stated that the Company had sufficient cash to survive at least into mid-2003 without the need for further financing. These statements were false, and on November 29, 2001, defendants announced a transaction where the shareholders' equity was destroyed in exchange for a cash infusion of $800 million. Trading in the Company's stock was immediately halted. For more information, contact Donald J. Enright by Phone: 866.592.1960 (toll-free) or 202.337.8000 by E-mail: DJE@FTLLAW.com or visit the firm's Website: http://www.FTLLAW.com. XO COMMUNICATIONS: Stull Stull Initiates Securities Suit in E.D. VA ------------------------------------------------------------------- Stull Stull and Brody LLP commenced a securities class action in the United States District Court for the Eastern District of Virginia, on behalf of purchasers of XO Communications, Inc. (NASDAQ:XOXO), common stock between April 4, 2001 and November 29, 2001, inclusive against the Company and defendants: (1) Daniel F. Akerson, Chief Executive Officer and Chairman of the Board of Directors, (2) Nathaniel A. Davis, President, Chief Operating Officer and Director, and (3) Craig O. McCaw, the Company's founder, controlling shareholder, and Director The suit charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5) by issuing false and misleading statements regarding the Company's financial condition as well as its present and future business prospects. In particular, the suit alleges that defendants mislead the investing public concerning the ability of the Company to survive until it would be cash flow positive. Throughout the class period, the defendants stated that the Company would be able to survive at least into the middle of 2003 without the need for further financing. However, on November 29, 2001, defendants announced a transaction where the shareholders' equity was destroyed in exchange for an investment of $ 800 million. Trading in the Company's stock was quickly halted. For more information, contact Timothy J. Burke by Phone: 888.388.4605 by E-mail: tburke@secfraud.com or visit the firm's Website: http://www.secfraud.com. ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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