/raid1/www/Hosts/bankrupt/CAR_Public/020510.mbx
C L A S S A C T I O N R E P O R T E R
Friday, May 10, 2002, Vol. 4, No. 92
Headlines
ALASKA: Fishermen Sue To Block Plan To Divide Sockeye Salmon Catch
BURLINGTON NORTHERN: Settling EEOC Suit For ADA Violations For $2.2M
CANADA POST: Consumers File Suit For Breach of Contract in CD-ROM Sale
FORD MOTOR: Plaintiffs In Product Liability Suits Ask For Rehearing
GEORGIA: Appeals Court Says DeKalb Jail Not Complying With Settlement
LOCKFORMER COMPANY: Will Pay For IL Residents' Hook-Ups To Clean Water
OKLAHOMA: Implementation of Racial Bias Suit Settlement To Cost $1.4M
PRE-PAID LEGAL: AL Court Dismisses Consumer Suit Over Legal Products
SONG ROYALTIES: Larry Hagman Objects To Music Royalties Suit Settlement
STARBUCKS COFFEE: Customers File Suit For ADA Violations in OH Court
SULZER MEDICA: 57 Patients Want To Opt Out, as Judge Studies Settlement
TOBACCO LITIGATION: Philip Morris Aims At Reducing US$150M Award
UNIVERSITY OF MISSOURI: $470M Suit Might Lead To System's Bankruptcy
WASTE MANAGEMENT: CA Residents File US$5.5M Suit For "Overcharging"
Securities Fraud
CORNELL COMPANIES: Mounting Vigorous Defense V. Securities Suits in TX
CORNELL COMPANIES: Faces Shareholder Derivative Suit in TX State Court
DOV PHARMACEUTICAL: Cauley Geller Lodges Securities Suit in S.D. NY
DOV PHARMACEUTICAL: Schiffrin & Barroway Lodges Securities Suit in NY
DOV PHARMACEUTICAL: Schoengold & Sporn Lodges Securities Suit in NY
DOV PHARMACEUTICAL: Stull Stull Commences Securities Suit in S.D. NY
DYNEGY INC.: SEC Turns Inquiry Over Gas Deal Into Formal Investigation
EXELON CORPORATION: Milberg Weiss Initiates Securities Suit in N.D. IL
FLAG TELECOMS: Scott + Scott Commences Securities Fraud Suit in S.D. NY
GERBER SCIENTIFIC: Berman DeValerio Lodges Securities Suit in CT Court
GERBER SCIENTIFIC: Scott Scott Commences Securities Suit in CT Court
ICG COMMUNICATIONS: Plaintiffs File Amended Securities Fraud Suit in CO
L90 INC.: Weiss Yourman Commences Securities Fraud Suit in C.D. CA
L90 INC.: Cauley Geller Commences Securities Fraud Suit in C.D. CA
MERRILL LYNCH: Pomerantz Haudek Commences Securities Suit in S.D. NY
NTL INC.: Scott + Scott Lodges Securities Fraud Suit in S.D. California
PEREGRINE SYSTEMS: Scott + Scott Commences Securities Suit in S.D. CA
PEREGRINE SYSTEMS: Cauley Geller Commences Securities Suit in S.D. CA
PEREGRINE SYSTEMS: Slotnick Shapiro Files Securities Suit in S.D. CA
PEREGRINE SYSTEMS: Entwistle Cappucci Files Securities Suit in S.D. CA
PEREGRINE SYSTEMS: Berman DeValerio Lodges Securities Suit in S.D. CA
PEREGRINE SYSTEMS: Schiffrin & Barroway Lodges Securities Suit in CA
PEREGRINE SYSTEMS: Chitwood & Harley Lodge Securities Suit in S.D. CA
TURNSTONE SYSTEMS: Plaintiffs File Amended Consolidated Suit in N.D. CA
TURNSTONE SYSTEMS: Plaintiffs File Second Amended Derivative Suit in CA
TURNSTONE SYSTEMS: To Mount Vigorous Defense V. Securities Suit in NY
UNIVERSAL ACCESS: Milberg Weiss Commences Securities Suit in E.D. TX
UNIVERSAL ACCESS: Bernard Gross Commences Securities Suit in E.D. TX
US TIMBERLANDS: Six Suits Withdrawn as Privatization Details Change
VIROPHARMA INC.: Bernstein Liebhard Lodges Securities Suit in E.D. PA
*********
ALASKA: Fishermen Sue To Block Plan To Divide Sockeye Salmon Catch
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Two commercial fishermen have sued Alaska's Board of Fisheries to try
to block a plan to divide the sockeye salmon catch at Chignik. The
fishermen contend that slicing the harvest into roughly equal shares
violates the Alaska Constitution and is an abuse of the Board's
authority, The Associated Press reports
Longtime Chignik fishermen, Dean Anderson and Michael Grunert, filed
their class action in Superior Court in Juneau. The suit asks the
court to declare the Board's co-op action invalid, and the lawsuit
further contends that making a special allocation to the co-op would
violate the "common use" and "equal treatment" clauses of the Alaska
Constitution's natural resources article.
The lawsuit also notes that Chignik fishermen face higher grocery, fuel
and insurance expenses, while the value of sockeye salmon has plunged
by more than half over the past 10 years. Statewide, salmon fishermen
are declaring their industry is in crisis.
The lawsuit shows the difficulty state officials face trying new ideas
to improve the poor economics of Alaska's commercial salmon industry.
Cutting costs and improving quality are vital for improving Alaska's
wild salmon's competitiveness against a tide of foreign-farmed fish now
dominating the market, according to fishing industry analysts and
Alaska economists.
The Board in January approved a cooperative approach to managing the
fishery at Chignik, on the Alaska Peninsula, where about 100 seine
boats converge each summer to net prime red salmon. Under the plan,
some or all of the boat owners may unite and designate a portion of the
fleet to catch the fish.
By agreeing to no longer race each other, some boats could be idled,
more care could be taken to keep the fish fresh, and all the fishermen
in the co-op, including those who do not fish, would share profits and
expenses and a share of the harvest.
A minority of Chignik fishermen declined to join the co-op. Catch
records are held confidential by the state, but it is believed that the
holdouts are "highliners," fishermen who traditionally have caught more
salmon than the average permit holder at Chignik.
No trial date has been set, but lawyers for the state have until May 25
to respond. Lance Nelson, an assistant attorney general who advises
the Board of Fisheries, said that the Board reviewed all the co-op's
legal ramifications and the state "is willing to defend a challenge to
the regulation."
BURLINGTON NORTHERN: Settling EEOC Suit For ADA Violations For $2.2M
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Burlington Northern Santa Fe Railway Co. agreed to settle for US$2.2
million a complaint filed with the Equal Employment Opportunity
Commission (EEOC), alleging the Company secretly subjected employees to
genetic testing after they submitted work-related injury claims, the
Associated Press reports.
The EEOC filed a suit against the Company in February 2001 after it was
discovered that the Company tested workers who submitted claims of
work-related carpal-tunnel syndrome, a hand and wrist strain condition
believed to be caused by repetitive motion.
The Company allegedly instituted the tests to determine which of their
workers might be genetically inclined to develop the condition, with
hopes to deny them workers' compensation benefits. The employees
allegedly were not told of the nature of the tests, nor did the Company
ask for their permission to do the tests.
The EEOC charged the Company with violations of the Americans with
Disabilities Act. The Company later agreed to halt the tests, but the
EEOC continued to investigate the workers' claims.
The EEOC did not find evidence that Burlington Northern used genetic
tests to screen out workers for employment-related reasons, but the
"mere gathering of an employee's DNA may constitute a violation of the
ADA," EEOC Commissioner Paul Steven Miller told AP.
The Company denies the allegations of the suit. Company Chairman and
Chief Executive Officer, Matthew K. Rose, said, "We continue to believe
that none of the company's actions were contrary to the law."
CANADA POST: Consumers File Suit For Breach of Contract in CD-ROM Sale
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Canada Post faces a class action filed by Vancouver resident John Chen,
charging the Company, Cybersurf Corporation and its subsidiary 3Web
Corporation with fraudulent advertising and breach of contract,
Canoe.ca reports. The suit charged the defendants with selling a CD-
ROM for lifetime Internet and e-mail access that later turned out to
cost a monthly fee.
Mr. Chen bought the CD-ROM in March 2000 for $9.95 because it offered
him free Internet and e-mail access for life. However in August 2001,
he an e-mail from Cybersurf saying the service would immediately start
costing $9.95 a month.
"It's a lie," Mr. Chen said, according to a Canoe.ca report. "They
basically said you pay the monthly service (fee) or you're going to be
cut off." Over 140,000 Canadians allegedly accepted the offer, said
lawyer for the plaintiffs Jim Poyner. He adds, "They're upset because
they contracted for a service that was withdrawn in breach of that
contract.They contracted for a lifetime service of e-mail and Internet
access at a price that seems like a very low price, $9.95, but that was
the contract, that was the agreement."
Mr. Poyner added that the plaintiffs want the Company to refund
customers the CD-ROM price of $9.95, plus taxes. "We want them to
refund the money and compensate the class members for the ongoing cost
of the service.These people are entitled to be compensated for their
expected lifespan," he added.
The suit is the third lawsuit of its kind filed against the defendants.
Similar suits are pending in Quebec and Ontario.
Canada Post spokesman John Caines told Canoe.ca the Company is merely
the seller of the CD-ROM and isn't responsible for a change in service
by Cybersurf. The Company allegedly participated in the deal with
Cybersurf because users of the CD-ROM gained immediate access to the
its Web site and services including postal codes and courier service.
"It's pretty clear cut from our point of view that we saw it as a good
opportunity to provide Canadians with access to the Internet and also
access to our electronic products and services," he states. Cybersurf
representatives were not available for comment.
FORD MOTOR: Plaintiffs In Product Liability Suits Ask For Rehearing
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Plaintiffs in the product-liability class actions against Ford Motor
Company and Bridgestone Corporation's Firestone unit asked the full
Seventh Circuit Court of Appeals to reconsider a three-judge panel of
the Court's denial of class action status for the suits, Reuters
reports. The suits allege breach of warranty and consumer fraud, and
seek compensation for millions of owners of Ford Explorers equipped
with any of Firestone tires since 1990.
According to an earlier Class Action Reporter story, the suit arose
after hundreds of Ford Explorer owners experienced "rollover" accidents
last year. Bridgestone/Firestone has recalled millions of these tires
because of an alleged manufacturing defect that caused the treads to
peel loose at highway speeds.
The tires have been linked to 271 deaths by federal safety regulators
and more than 800 injuries. These caused the two companies to settle
hundreds of cases out-of-court as well as to sever their nearly 100-
year business relationship, due to public bickering over who was to
blame.
The suits are different from other suits spawned by the recall because
plaintiffs in the litigation are seeking compensation for the tires and
for the diminished resale of their Ford Explorers - not personal injury
awards.
A three-judge appeals panel in Chicago overturned a lower-court
decision granting class certification to the suits, saying the injury
is decided where the consumer is located rather than where the seller
maintains its headquarters. This would involve considering the laws of
all states into play, which would make the case too unwieldy to
proceed.
"If the entire Seventh Circuit looks at this opinion, we're sure
they'll see that an error was made by the panel that reviewed the
case," Irwin Levin, an attorney with Cohen & Malad, Indianapolis told
Reuters. The attorneys argue that the panel applied the wrong
standards when reviewing the case and inappropriately substituted its
fact-finding for that of Federal Judge Sarah Evans Barker in
Indianapolis.
The attorneys' petition, if granted, would involve a hearing in front
of all 11 active Appellate-Court Judges. A decision could come within
the next two weeks.
GEORGIA: Appeals Court Says DeKalb Jail Not Complying With Settlement
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Georgia's Court of Appeals upheld a state court ruling, saying the
DeKalb County Jail was not complying with an agreement forged in March
2001 to settle a class action, alleging the jail fail to provide
adequate medical care to its inmates, the Atlanta Journal-Constitution
reports.
In November, DeKalb County Superior Court Judge Hilton Fuller slapped a
civil and criminal contempt citation on the county, citing two inmate
deaths at the jail and tens of thousands of sloppily filed records.
The County then appealed the decision, saying it did not get due
process and that there was insufficient evidence of inadequate care.
The Appeals Court found Judge Fuller was not biased against the county
and there was sufficient evidence of poor medical care.
County Attorney Charles Hicks was not available for comment, the
Atlanta Journal-Constitution reports.
LOCKFORMER COMPANY: Will Pay For IL Residents' Hook-Ups To Clean Water
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Lisle, Illinois residents who cannot afford to hook up to clean water
will get financial help as a result of an agreement reached recently by
Illinois Attorney General James Ryan and Lisle manufacturer, the
Lockformer Company, the Chicago Daily-Herald reported.
The Company is accused in a lawsuit brought by the Attorney General of
contaminating wells south of its headquarters in Lisle with
trichloroethylene (TCE). Mr. Ryan's case is but one of four legal
actions brought against the Company, one of which is a class action.
The agreement is one step toward resolving the Attorney General's
lawsuit, which is not yet scheduled for trial. Company officials admit
that TCE spilled on their property, but deny that the chemical traveled
off-site and tainted the aquifer.
Speaking of the deal that will enable all Lisle residents whose wells
are contaminated beyond the allowable drinking water standard for TCE
of five parts per billion, Sean Collins, the attorney for Lisle
residents in the class action, said that "It's potentially very, very
helpful to the families that don't have clean, safe water. It's a step
in the right direction."
The agreed order requires the Company to pay fees to connect to Lisle's
water system for homeowners living with a specified area south of the
plant. The deal allows residents to recoup village connection fees,
private plumbing costs, landscaping expenses and well-capping charges.
The offer is open for one year, effective from the day homeowners
receive notification from the Attorney General's office.
Consuming or inhaling TCE in large concentrations has been associated
with ailments ranging from dizziness and rashes to cancer, lung and
liver damage.
OKLAHOMA: Implementation of Racial Bias Suit Settlement To Cost $1.4M
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The city of Tulsa, Oklahoma will pay more than US$1.4 million in the
first year to implement a proposed settlement of a class action filed
by black police officers, The Associated Press recently reported. The
potential costs for the lawsuit through the end of fiscal year 2003
could exceed US$4 million, officials said.
Among other things, the proposed settlement, which would settle the
lawsuit filed by black officers alleging racial discrimination, would
require the department to review its recruitment methods, track its
contact with citizens and create television advertisements to educate
citizens on how to file a complaint against officers.
The Tulsa Police Department's budget for 2003 includes $36,000 for a
federal court monitor and $652,000 in computer-related expenses.
Police have estimated that a computerized data collection system would
cost about $1 million plus $400,000 annually for the next five years to
implement. Police Chief Ron Palmer says the estimate for the data
collection system is a low figure, because he does not believe the
whole scope of the project was incorporated into the initial figures.
The lawsuit already has cost the city more than $1.5 million in legal
fees. The Atlanta law firm that represented the city of Tulsa is suing
in federal court to recover an additional $691,000 the firm claims it
has not been paid.
PRE-PAID LEGAL: AL Court Dismisses Consumer Suit Over Legal Products
--------------------------------------------------------------------
An Alabama court dismissed with prejudice the consumer class action
pending against Pre-Paid Legal Services, Inc., marking the third win in
a recent string of legal victories for the Ada, Oklahoma-based Company,
the Associated Press reports.
The suit charges the Company with misrepresenting its products, legal
plans such as will preparation and traffic defense. The customers who
filed the lawsuit contended that they believed they would be covered
for "all future legal expenses."
The Company also obtained a victory when a class action accusing them
of misleading investors was dismissed with prejudice in March. The
lawsuit charged the Company with misleading investors by using
accounting practices that artificially inflated its earnings. The
shareholders are appealing this case.
The Company has since adopted more conservative accounting practices -
slashing past earnings by more than 50 percent - after losing several
battles with the Securities and Exchange Commission.
Talking about the Company's wins, Harland Stonecipher, the Company's
founder and chief executive officer said, "We believe there is a rhythm
evolving with these lawsuits." Mr. Stonecipher said the Company
believes there is a connection between the lawsuits and so-called
"short-sellers." "The goal of the `short-seller' is to get these
lawsuits picked up in the media which will air the negative, yet
unsubstantiated, allegations." He said that they believe this will
drive down the price of the stock and, by this, they profit. Mr.
Stonecipher said the Company will consider all available ways to recoup
its defense costs.
The Company claims to have more than 1.2 million customers. Services
that are not provided free are offered at a 25% discount.
SONG ROYALTIES: Larry Hagman Objects To Music Royalties Suit Settlement
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The US$4.75 settlement of a royalties class action filed against
multimedia company Universal Music Group, a unit of Vivendi Universal,
faces an obstacle as "Dallas" actor Larry Hagman objected to the
settlement, saying it was too low and unfair to some artists, Reuters
reports.
The suit was led by late torch singer, Peggy Lee, and includes as a
class about 160 artists, many of whom are now dead. The class includes
such legends as Pearl Bailey, Louis Armstrong, Billie Holiday, Patsy
Cline, Ella Fitzgerald, the Andrews Sisters and Bill Haley and the
Comets. The suit alleges that the Company failed to pay the artists
millions of dollars by underreporting sales figures and overcharging
for services.
Mr. Hagman is the son of Broadway star, Mary Martin, who was known for
roles in musicals like "South Pacific" and "Peter Pan." He is also the
executor of her estate. Mr. Hagman's lawyer, Bruce Broillet told
Reuters, the "settlement is too low. It seems rather unusual that $4.75
million would be used to compensate what has been done to so many
outstanding artists in American history."
In court papers filed Tuesday, Mr. Hagman urged Los Angeles Superior
Court Judge Victoria Gerrard Chaney to reject the settlement. In a
hearing conducted this week for the settlement, Judge Chaney ordered
Ms. Lee's and Mr. Hagman's lawyers to meet within 20 days and try to
resolve their differences. She set another hearing for June 21, Cyrus
Godfrey, Lee's attorney told Reuters.
STARBUCKS COFFEE: Customers File Suit For ADA Violations in OH Court
--------------------------------------------------------------------
Starbucks Coffee Company faces a class action pending in the United
States District Court in Ohio, charging the coffee chain with
violations of the Americans With Disabilities Act, the Associated Press
reports.
John Somrak of Fairview Park, who is paralyzed from the waist down from
a spinal cord injury at work, and Stacey Lang, of Avon Lake, who has
multiple sclerosis, filed the suit, alleging four of its Cleveland area
stores were inaccessible to the handicapped. The outlets allegedly
lacked ramps and adequate parking.
Company spokeswoman Audrey Lincoff, told AP that the Company tries to
comply with requirements of the law regarding access for the
handicapped. She said, "Starbucks has not yet been served with a copy
of this suit and has no specific information about the plaintiffs'
claims."
The Company faces a similar suit in Florida, which was settled after
seven months. The attorney who filed the Florida lawsuit, Gregory
Schwartz, told AP the Company promptly responded to the lawsuit and
"got it done very quickly."
SULZER MEDICA: 57 Patients Want To Opt Out, as Judge Studies Settlement
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Lawyers for beleaguered Sulzer Medica subsidiary, Sulzer Orthopedics,
expressed confidence that Federal Judge Kathleen O'Malley will grant
approval to the US$1 billion settlement the Company proposed to settle
more than 2,000 lawsuits over faulty hip and knee implants, the
Associated Press reported.
In December 2000, the Company was forced to recall thousands of
artificial joints due to a manufacturing problem that had contaminated
some with an oily residue. The substance prevented the new joint from
bonding with patients' bones. Soon after, personal injury and class
action lawsuits were filed in Ohio federal court.
The agreement specifies that Sulzer's parent, Sulzer Medica, should pay
$725 million toward the settlement. Patients who got the faulty
implants redone without experiencing complications could each receive
about $200,000. The payment is higher for patients who experienced
complications. About $40,000 of each patient's sum will go toward
attorney fees.
A group of 57 patients, however, still want to opt out of the
settlement, which could be problematic for the Company when it reaches
into its "pockets" to pay the claims. The Company's lead counsel,
Richard Scruggs said that "opt-outs," patients who choose to pursue
litigation independently, could bankrupt the Company. If a large
number opt-out of the proposed settlement, the Company has warned that
it will put its subsidiary into Chapter 11 bankruptcy. The total
number of opt-outs will not be known before the May 14 opt-out
deadline.
Still, the Company's lawyers said that they approve of the settlement
at the suit's fairness hearing before Judge O'Malley. Judge O'Malley
could reach her decision on the fairness issue as early as this week,
attorneys said, according to an Associated Press report.
The Company has been trying to rebuild the confidence of investors and
patients under an almost completely new management team led by Stephan
Rietiker. The Company is due to announce a new name next week as part
of its attempt to make a fresh start. Company shares jumped 14 percent
amid expectations that Judge O'Malley would approve the settlement.
TOBACCO LITIGATION: Philip Morris Aims At Reducing US$150M Award
-------------------------------------------------------------------
Lawyers for Philip Morris are returning to Multnomah County, in Oregon,
to try to get a $150 million verdict reduced, reported The Associated
Press. In March, an Oregon jury awarded the money to the estate of
Michelle Schwarz, who died from lung cancer. Her family filed a
lawsuit, alleging Ms. Schwarz's lung cancer was caused by the Company's
marketing of low-tar cigarettes as a healthier alternative.
The defense team, at its award-reduction hearing, is arguing that $150
million in punitive damages is excessive compared with the $168,000 the
jury awarded in compensatory damages. The 890-to-one ratio is 10 times
as high as Oregon's previous record ratio.
The Company must file a motion for a new trial within 10 days of the
hearing. If the motion is granted, the case would travel to the Oregon
Court of Appeals in Salem. If it stands, the jury's verdict against
The Company could be the largest ever for a tobacco lawsuit by an
individual. It could also spark similar lawsuits, individual and
class action, over the marketing of low-tar cigarettes.
Michael York, a Company spokesman, said the Schwarz estate never proved
that Michelle Schwarz's decisions were directly linked to something the
Company did or did not do. The Company will bring a high-powered
defense team to the hearing, with lawyers from Seattle, Portland,
Eugene and Washington.
Charles Tauman, one of the Schwarz family's lawyers, said that as many
as 80 percent of US smokers use light cigarettes, and that the "vast
majority understood they were reducing risks" related to tobacco.
Although they are not considering a class-action suit, the Schwarz
legal team says it has fielded more than 100 calls from smokers across
Oregon who are interested in similar lawsuits.
UNIVERSITY OF MISSOURI: $470M Suit Might Lead To System's Bankruptcy
--------------------------------------------------------------------
The US$470 million class action against the University of Missouri
might cause the university system to go bankrupt, U-wire.com reports.
The suit was filed in 1998 relating to an 1872 law made tuition free to
all in-state "youths." The University of Missouri system labeled fees
students paid as "educational fees," which the legislation allows.
The university is awaiting the ruling of Judge Kenneth Romines on the
suit. If the ruling is in favor of the plaintiffs, Romines will decide
how the UM system must compensate nearly 250,000 students who paid fees
to the university between 1995 and 2001. Because the suit is a class
action lawsuit, the three plaintiffs represent all in-state students
who paid fees during those six years, U-wire.com reports.
"Typically, the class-action lawsuit is one in which the plaintiff or
the defendants are a class of persons that are defined by some
characteristic and not individually named," professor of law William
Fisch told U-wire. "The most important criteria is that whatever relief
is sought would be common to all members of the class."
Because the case is under adjudication, both UM counsel Phil Hoskins
and UM system spokesman Joe Moore declined to comment, according to U-
wire.com.
WASTE MANAGEMENT: CA Residents File US$5.5M Suit For "Overcharging"
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Waste Management, Inc. faces a US$5.5 million class action filed in the
Los Angeles Superior Court, alleging the nation's largest trash company
overcharged business and residents in Carson, California for the past
eleven years, the Daily Breeze.
The suit was filed by Carson planning commissioner Joe Merton, who is
also active with the Confederation of Filipino-American Association,
Perpetua Z. Roxas, owner of Filipino-food restaurant Manila Sunrise,
and Celso Roque on behalf of the "general public."
Attorney for the plaintiffs Major Langer told the Daily Breeze the
lawsuit, "has to do with systematic overcharging of the citizens.It was
not just negligent. We believe it was intentional."
Officials at Waste Management, the largest trash company in the United
States, had not been served with the suit as of Monday afternoon.
"Based on our understanding, the allegations raised in the complaint
have no merit," Waste Management attorney John Newell said. "We have
not overcharged the residents in Carson. We self-reported some issues
and fully cooperated in that process."
After Waste Management is served, officials have 30 days to respond to
the suit before a hearing date is set.
Securities Fraud
CORNELL COMPANIES: Mounting Vigorous Defense V. Securities Suits in TX
----------------------------------------------------------------------
Cornell Companies, Inc. faces several securities class actions pending
in the United States District Court for the Southern District of Texas
on behalf of all purchasers of the Company's common stock between March
6, 2001 and March 5, 2002. The suit also names officers Steven W.
Logan and John L. Hendrix as defendants.
The suits involve disclosures made concerning two prior transactions
executed by the Company, the August 2001 sale/leaseback transaction and
the 2000 synthetic lease transaction. The suits allege that the
defendants violated Section 10(b) of the Securities Exchange Act of
1934, Rule 10b-5 promulgated under Section 10(b) of the Exchange Act,
and/or Section 20(a) of the Exchange Act.
The Company believes that it has good defenses to each of the
plaintiffs' claims and intends to vigorously defend against each of the
claims.
CORNELL COMPANIES: Faces Shareholder Derivative Suit in TX State Court
----------------------------------------------------------------------
Cornell Companies, Inc. faces a shareholder derivative suit filed in
the 127th Judicial District Court of Harris County, Texas. The suit
names the Company's directors, and its independent auditor, Arthur
Andersen LLP, as defendants and the Company as a nominal defendant.
The suit alleges breaches of fiduciary duty by all of the individual
defendants and asserts breach of contract and professional negligence
claims only against Arthur Andersen LLP.
The Company believes that it has good defenses to each of the
plaintiffs' claims and intends to vigorously defend against each of the
claims. While the plaintiffs in these cases have not quantified their
claim of damages and the outcome of the matters discussed above cannot
be predicted with certainty, based on information known to date,
management believes that the ultimate resolution of these matters will
not have a material adverse effect on the Company's financial position,
operating results or cash flow.
DOV PHARMACEUTICAL: Cauley Geller Lodges Securities Suit in S.D. NY
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Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of purchasers of the common stock of DOV Pharmaceutical,
Inc. (Nasdaq: DOVP) who purchased DOV shares pursuant and/or traceable
to its initial public offering on April 25, 2002.
The suit alleges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933 by issuing a materially false and
misleading prospectus in connection with the offering because the
prospectus failed to adequately and timely disclose the Company's
correct financial results.
As alleged in the complaint, just before the offering priced, the
Company made a last-minute change to its Offering documents to reflect
a revision of its 1999 financial results for a joint venture in Bermuda
with Elan Corp. The accounting change widened the Company's net loss
at the venture, known as DOV Bermuda Ltd., to $11.9 million in 1999,
from a previously reported loss of $10.2 million.
The complaint alleges that this change was deeply buried in the revised
documents where it was very difficult, if not impossible, for investors
to see and evaluate prior to the commencement of the trading. As a
result, the complaint alleges, investors were deprived of the
opportunity to rely on the Company's new financial information, causing
a steep decline in the price of the Company's shares once they began to
be publicly traded and the Company's true financial information became
known.
When Company shares finally opened for trading for the first time, the
price of Company shares began trading at $11.25 per share (after having
been priced at $13 per share) and reached an intra-day high of $12 per
share. By the end of the day, the stock had closed at $8.70 per share,
or 33% below the offering price, making it one of the worst performing
IPOs in the past two years.
For more details, contact Jackie Addison, Sue Null or Shelly Nicholson
by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
888-551-9944 by E-mail: info@classlawyer.com or visit the firm's Web
site: http://www.classlawyer.com
DOV PHARMACEUTICAL: Schiffrin & Barroway Lodges Securities Suit in NY
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of New York on
behalf of all purchasers of the common stock of DOV Pharmaceutical,
Inc. (Nasdaq: DOVP) pursuant and/or traceable to its initial public
offering on April 25, 2002.
The suit charges the Company and certain of its officers and directors
with issuing false and misleading statements concerning its business
and financial condition. Specifically, the complaint alleges that just
before the offering priced, the Company made a last-minute change to
its offering documents to reflect a revision of its 1999 financial
results for a joint venture in Bermuda with Elan Corp. The accounting
change widened the Company's net loss at the venture, known as DOV
Bermuda Ltd., to $11.9 million in 1999, from a previously reported loss
of $10.2 million.
The suit alleges that this change was deeply buried in the revised
documents where it was very difficult, if not impossible, for investors
to see and evaluate prior to the commencement of the trading. As a
result, the complaint alleges, investors were deprived of the
opportunity to rely on the Company's new financial information, causing
a steep decline in the price of the Company's shares once they began to
be publicly traded and the Company's true financial information became
known.
When the Company's shares finally opened for trading for the first
time, the price of Company shares began trading at $11.25 per share
(after having been priced at $13 per share) and reached an intra-day
high of $12 per share. By the end of the day, the stock had closed at
$8.70 per share, or 33% below the offering price, making it one of the
worst performing IPOs in the past two years.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 or by E-mail:
info@sbclasslaw.com
DOV PHARMACEUTICAL: Schoengold & Sporn Lodges Securities Suit in NY
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Schoengold & Sporn, PC initiated a securities class action on behalf of
all persons or institutions who purchased shares of Dov Pharmaceutical,
Inc. (NASDAQ: DOVP) pursuant and/or traceable to its initial public
offering on April 25, 2002, in the United States District Court for the
Southern District of New York.
The suit alleges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933 by issuing a materially false and
misleading prospectus in connection with the offering because the
prospectus failed to adequately and timely disclose the Company's
correct financial results.
As alleged in the complaint, just before the offering, the Company made
a last-minute change to its offering documents to reflect a revision of
its 1999 financial results for a joint venture in Bermuda with Elan
Corp. The accounting change widened the Company's net loss in the
venture, known as Dov Bermuda Ltd., to $11.9 million in 1999, from a
previously reported loss of $10.2 million.
The suit alleges that this change was deeply buried in the revised
documents where it was very difficult, if not impossible, for investors
to see and evaluate prior to the commencement of the trading. As a
result, the complaint alleges, investors were deprived of the
opportunity to rely on the Company's new financial information, causing
a steep decline in the price of the Company's shares once they began to
be publicly traded and the Company's true financial information became
known.
When Company shares finally opened for trading for the first time, the
price of Company shares began trading at $11.25 per share (after having
been priced at $13 per share) and reached an intra-day high of $12 per
share. By the end of the day, the stock had closed at $8.70 per share,
or 33% below the offering price, making it one of the worst performing
IPOs of the past two years.
For more information, contact Jay P. Saltzman or Ashley Kim by Mail: 19
Fulton Street, Suite 406, New York NY 10038 by Phone: 866-348-7700 by
Fax: 212-267-8137 or by E-mail: Shareholderrelations@spornlaw.com
DOV PHARMACEUTICAL: Stull Stull Commences Securities Suit in S.D. NY
--------------------------------------------------------------------
Stull Stull & Brody LLP initiated a securities class action in the
United States District Court for the Southern District of New York, on
behalf of all purchasers of the common stock of DOV Pharmaceutical,
Inc. (NASDAQ:DOVP) between April 25, 2002 and April 29, 2002, inclusive
against the Company, certain of its officers and directors, and the
lead underwriters of its initial public offering (IPO).
The suit asserts claims under Sections 11 and 12 of the Securities Act
of 1933. The violations, as the complaint alleges, stem from the
issuance of allegedly misleading financial statements contained in the
Company's IPO-related registration statement and prospectus that
understated expenses arising from a joint venture in Bermuda (DOV
Bermuda Ltd.).
The complaint alleges that the Company issued five million shares in
its IPO on April 25, 2002 at $13 per share, but failed to timely inform
the class of the revision in its financial results. Consequently, as
the complaint alleges, Company investors experienced a two-fold
surprise on April 25, 2002 when Company shares began public trading:
(1) investors discovered that the Company's previously-issued
financial statements had been misleading; and
(2) investors witnessed Company shares lose approximately 33% of
their value in one day, falling from their offering price of
$13.00 to close trading at $8.70 per share.
For more details, contact Tzivia Brody by Mail: 6 East, 45th Street,
New York NY 10017 by Phone: 1-800-337-4983 by Fax: 212-490-2022 or by
E-mail: SSBNY@aol.com
DYNEGY INC.: SEC Turns Inquiry Over Gas Deal Into Formal Investigation
----------------------------------------------------------------------
The United States Securities and Exchange Commission (SEC) intend to
upgrade their inquiry on Dynegy, Inc.'s five year natural gas deal with
ABG Gas Supply LLC from an inquiry to a formal investigation,
FOXnews.com reports.
The SEC started it's probe when the Company revealed that the deal,
labeled "Project Alpha" saved it $80 million in taxes in 2001 by
lowering its effective tax rate but cost it $35 million in other
expenses last year, in a SEC filing last month.
The filing drew accusations that it used questionable accounting and
misled investors. When the Company revealed they were being probed by
the SEC, its stocks plummeted nearly 9% to US$9.95 on the New York
Stock Exchange, reaching its lowest level since late 1999.
In a statement, the Company said it would "cooperate fully" with the
SEC probe. However, this latest development points to larger problems
ahead for the Company in the wake of the Enron collapse, as investors
have particularly regarded other companies active in deregulated
electricity and natural gas markets with some suspicion, concerned that
they might have overstated their financial strength and profitability,
FOXnews.com reports.
EXELON CORPORATION: Milberg Weiss Initiates Securities Suit in N.D. IL
----------------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action on behalf of purchasers of the securities of Exelon Corporation,
(NYSE: EXC) between April 24, 2001 and September 27, 2001 inclusive, in
the United States District Court for the Northern District of Illinois,
Eastern Division against:
(1) Corbin A. McNeill, Jr., Co-CEO and Chairman,
(2) John W. Rowe, Co-CEO and President and
(3) Ruth Ann Gillis, CFO
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, by issuing a series of materially false and misleading
statements to the market between April 24, 2001 and September 27, 2001.
The complaint alleges that the Company repeatedly issued statements
concerning the strength of its operations and repeatedly assured the
market that it would meet or beat its $4.50 per share earnings figure
for 2001.
The suit alleges that these statements were materially false and
misleading because they failed to disclose, among other things:
(i) that the investments in telecommunications companies held by
Exelon's Enterprises segment were plummeting in value at a
rapid pace. Accordingly, Enterprises could not and would not
meaningfully contribute to the Company's results and, in fact,
the Company was carrying tens of millions of dollars of
impaired investments on its financial statements; and
(ii) that InfraSource, Exelon's infrastructure subsidiary, was
experiencing declining demand for its products as its primary
customers, telecommunications companies, were facing severe
industry-wide problems, such as mounting debt and over-
capacity, and were significantly cutting back on their capital
expenditures.
On September 27, 2001, the Company issued a press release announcing
that it would not meet its earnings commitment of $4.50 for 2001,
blaming the economy, poor weather and write-downs for failed
investments made by the Enterprises unit.
In reaction to the announcement, the Company's common stock price
plunged by 22%, falling to a low of $38.85 per share on September 27,
2001, after closing at $50.45 the previous day, on extremely heavy
trading volume.
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: exeloncase@milbergNY.com or visit the
firm's Web site: http://www.milberg.com
FLAG TELECOMS: Scott + Scott Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action in the United
States District Court for the Southern District of New York on behalf
of purchasers of the shares of FLAG Telecom Holdings, Ltd.
(Nasdaq:FTHLQ) between March 23, 2001 and February 13, 2002, 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 a series of material misrepresentations to the
market between March 23, 2001 and February 13, 2002, thereby
artificially inflating the price of Company shares.
The suit alleges that throughout the class period, the Company reported
strong year-over-year revenue growth. Unbeknownst to investors,
however, as alleged in the complaint, the Company was experiencing
diminishing revenue growth.
The suit alleges that in order to create the impression that the
Company was continuing to experience growth, the Company engaged in a
series of reciprocal transactions with certain competitors for the
purchase and sale of dark fiber optic cable - the so-called dark fiber
swap.
The suit alleges that as a result of these transactions, the Company
artificially inflated its operating results and materially
misrepresented its financial results at all relevant times.
For more details, contact Neil Rothstein, David R. Scott or James E.
Miller by Phone: 800-404-7770 by E-mail: nrothstein@scott-scott.com,
drscott@scott-scott.com or jmiller@scott-scott.com or visit the firm's
Web site: http://www.scott-scott.com
GERBER SCIENTIFIC: Berman DeValerio Lodges Securities Suit in CT Court
----------------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt & Pucillo initiated a securities
class action against Gerber Scientific, Inc. (NYSE:GRB) accusing the
Company and several top officers of defrauding investors, in the United
States District Court for the District of Connecticut. It seeks damages
for violations of federal securities laws on behalf of all investors
who bought the Company's common stock from May 27, 1999 through April
12, 2002.
The suit states that the Company issued materially false and misleading
information to the public during the class period, artificially
inflating the price investors paid for company stock.
The suit claims that the Company, a supplier of automated manufacturing
systems, repeatedly touted the MAXX system's success in the marketplace
when in reality the product was defective. As a result of problems
with the MAXX product and the economic downturn, the Company knowingly
or recklessly allowed inventory at its Sign Making and Specialty
Graphics group to build up, the complaint says.
In addition, according to the complaint, the Company failed to properly
write down the backlog or establish appropriate reserves in accordance
with generally accepted accounting principles.
The problems came to light on April 15, 2002, the complaint states,
when the Company revealed that it expected to take a $12 million charge
in the fourth quarter of 2002 composed principally of inventory write-
downs.
At the same time, the complaint says, the Company announced an internal
review of its financial reporting from January 1, 1998 through the
current fiscal year. The internal review, the company revealed, came in
response to a Securities and Exchange Commission investigation of its
inventory and reserve accounting practices and related disclosures.
Following the Company's disclosures, its stock price fell 11%, from a
close of $7.85 on April 12, 2002 to a close of $6.99 on April 15, 2002.
For more details, contact Alicia M. Duff or Michael G. Lange by Mail:
One Liberty Square, Boston, MA 02109 by Phone: 800-516-9926 by E-mail:
law@bermanesq.com or visit the firm's Web site:
http://www.bermanesq.com.
GERBER SCIENTIFIC: Scott Scott Commences Securities Suit in CT Court
--------------------------------------------------------------------
Scott + Scott LLC initiated a securities class action lawsuit on April
18, 2002, on behalf of purchasers of the securities of Gerber
Scientific, Inc. (NYSE: GRB) between May 27, 1999 and April 12, 2002,
inclusive, in the United States District Court, District of
Connecticut, Hartford, Connecticut against the Company and:
(1) Michael J. Cheshire,
(2) Marc T. Giles,
(3) George M. Gentile,
(4) Shawn M. Harrington,
(5) Gary K. Bennett and
(6) Anthony L. Mattacchione
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 a series of material misrepresentations to the
market between May 27, 1999 and April 12, 2002, thereby artificially
inflating the price of Company securities.
Throughout the class period, as alleged in the complaint, defendants
issued statements regarding the Company's quarterly and annual
financial performance and filed reports confirming such performance
with the United States Securities and Exchange Commission (SEC).
The complaint alleges that these statements were materially false and
misleading because, among other things:
(i) the Company was employing improper inventory and reserve
accounting practices in violation of generally accepted
accounting principles. As a result, the Company's operating
results were materially misrepresented and overstated;
(ii) the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and
(iii) based on the foregoing, defendants' statements concerning the
prospects of the Company were lacking in a reasonable basis at
all times.
On April 15, 2002, before the market opened, the Company announced that
it expected to take a $12 million pre-tax charge in its fiscal fourth
quarter, the period ending April 30, 2002. Additionally, the Company
announced that, in response to an investigation by the SEC into its
inventory and reserve accounting practices, it was conducting an
internal review of its financial reporting for the period January 1,
1998 through April 30, 2002.
The Company further stated that its investigation is ongoing and once
it has been completed, the Company will likely restate its financial
results for the appropriate periods. In response to the Company's
announcements, the price of its common stock declined to $6.99 per
share, a decline of more than 71% from a class period high of $24.50
per share, reached on July 6, 1999.
For more details, contact Neil Rothstein by Phone: 619-251-0887 by E-
mail: nrothstein@scott-scott.com or visit the firm's Web site:
http://www.scott-scott.com
ICG COMMUNICATIONS: Plaintiffs File Amended Securities Fraud Suit in CO
-----------------------------------------------------------------------
Plaintiffs in the securities class action against certain officers of
ICG Communications filed a consolidated amended suit in the United
States District Court for the District of Colorado. The suits names as
defendants:
(1) J. Shelby Bryan, former Chief Executive Officer,
(2) William S. Beans, Jr., former president, and
(3) Harry R. Herbst, former Chief Financial Officer
The consolidated amended suit seeks unspecified damages for alleged
violations of Rules 10(b) and 20(a) of the Securities Exchange Act of
1934, and seeks class action certification for similarly situated
shareholders.
At this time, the Company has not been named a defendant because all
claims against the Company have been stayed pursuant to the Company's
filing for bankruptcy. However, the Company intends to vigorously
defend against the suit.
L90 INC.: Weiss Yourman Commences Securities Fraud Suit in C.D. CA
------------------------------------------------------------------
Weiss & Yourman initiated a securities class action in the United
States District Court for the Central District of California on behalf
of purchasers of L90, Inc. (Nasdaq: LNTYE) securities between July 26,
2001 and March 12, 2002, inclusive.
The complaint alleges that the Company, its Chief Executive Officer and
Chief Financial Officer violated the federal securities laws by
deliberately inflating the price of the Company's stock through a
series of false and misleading public statements concerning the Company
and its financial results and prospects.
As part of their effort to boost the price of the Company stock,
defendants misrepresented the Company's true prospects in an effort to
conceal its improper acts until they were able to conceal their fraud
by selling the Company to a third party prior to filing the Company's
10-K due March 31, 2002.
In order to overstate revenues and assets in its second and third
quarters of fiscal year 2001, the Company violated generally accepted
accounting principles and Securities and Exchange Commission rules by
engaging in improper "roundtrip" transactions with HomeStore.com and
its customers. These transactions had the effect of dramatically
overstating revenues and assets.
For more information, contact Weiss & Yourman - Los Angeles by Phone:
800-437-7918 by E-mail: info@wyca.com or visit the firm's Web site:
http://www.wyca.com
L90 INC.: Cauley Geller Commences Securities Fraud Suit in C.D. CA
------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Central District of
California, initially on behalf of purchasers of L90, Inc.
(Nasdaq:LNTY) common stock during the period between July 26, 2001 and
March 12, 2002, inclusive. However, the class period is being expanded
to include purchases between October 26, 2000 and March 12, 2002,
inclusive.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. L90 is a
provider of marketing services. The suit alleges that as part of their
effort to boost the price of Company stock, defendants misrepresented
the Company's true prospects in an effort to conceal its improper acts
until they were able to conceal their fraud by selling the Company to a
third party prior to filing the Company's 10-K (due March 31, 2002).
In order to overstate revenues and assets in its second and third
quarters of 2001, the Company violated generally accepted accounting
principles and SEC rules by engaging in improper "roundtrip"
transactions with HomeStore.com and its customers. These transactions
had the effect of dramatically overstating revenues and assets.
On February 4, 2002, the Company issued a press release entitled, "L90
Reports Regulatory Inquiries." The press release stated in part, "L90,
Inc., an online media and direct marketing company, today announced
that the Company has received notice from the Securities and Exchange
Commission that the Commission is conducting an investigation into the
Company. In connection with this investigation, the Commission has
issued the Company and one of its directors subpoenas requesting
documents related primarily to the Company's financial records."
On this news the Company's shares plummeted by more than 50% the
following trading day and continued to plummet further in the weeks
that followed and defendants revealed further incriminating facts.
On March 12, 2002, the Company issued a press release entitled, "L90
Provides Additional Information on Internal Investigation." The press
release stated in part, "L90, Inc., an online media and direct
marketing company, today provided additional information on the status
of the ongoing internal investigation by the Company and the Audit
Committee of its board of directors in response to the previously
announced Securities and Exchange Commission investigation of the
Company, and the request for information from Nasdaq Listing
Investigations."
For more details, 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 Web site:
http://www.classlawyer.com
MERRILL LYNCH: Pomerantz Haudek Commences Securities Suit in S.D. NY
--------------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross LLP initiated a securities
class action charging Merrill Lynch & Co., Inc. (NYSE:MER) and its
former Internet research analyst Henry M. Blodget with issuing false
and misleading analyst reports about At Home Corporation, doing
business as Excite@Home (OTCBB:ATHQE).
The suit was filed on behalf of investors who purchased the common
stock of Excite during the period from August 18, 1999 through June 20,
2001, inclusive, in the United States District Court for the Southern
District of New York.
The suit alleges that during the class period, defendants' research
reports and ratings on Excite were neither independent not objective,
but instead were biased and improperly influenced by Merrill Lynch's
lucrative investment banking business relationships with this important
client.
Also, unbeknownst to the investing public, Merrill Lynch's research
analysts' compensation was tied to, in part, on their contributions to
the firm's investment banking business. Plaintiff further charges that
Merrill Lynch issued positive ratings and coverage about Excite, while
concealing defendants' contemporaneous, private negative assessments
about this client.
For example, defendants repeatedly issued an Accumulate/Buy rating on
Excite despite Mr. Blodget's internal conclusion that this stock was a
"piece of crap," had a "flat" outlook and was without any "real
catalysts" for improvement.
Similarly, when defendants were publicly rating Excite an
Accumulate/Accumulate, Mr. Blodget was privately telling his colleagues
that the Company was "falling apart" and he "doesn't think there's any
reason to buy more."
Plaintiff additionally asserts that defendants failed to disclose that
although Merrill Lynch technically had five ratings, it had a policy
and practice of issuing only its top three ratings (buy, accumulate,
and neutral) to Internet companies. During the relevant time herein,
defendants never issued its two lowest ratings -reduce or sell- on such
companies, including Excite.
As a result of defendants' false and misleading statements, the market
price of Excite common stock was artificially inflated, maintained or
stabilized during the class period.
On April 8, 2002, New York State Attorney General Eliot Spitzer (the
"Attorney General") announced that a ten-month investigation had
revealed that Merrill Lynch's "supposedly independent and objective
investment advice was tainted and biased by the desire to aid Merrill
Lynch's investment banking business." Merrill Lynch's ratings on
Excite were among those challenged by the Attorney General.
Since then, the Attorney General has reportedly reached an interim
settlement with Merrill Lynch requiring it to make more meaningful
disclosures of its investment banking relationships with companies on
which it issues research reports, but larger issues relating to
possible payment of restitution and even criminal charges are still
unresolved. The Securities and Exchange Commission and certain states
have now announced their own investigations against Merrill Lynch.
For more information, contact Andrew G. Tolan by Phone: 888-476-6529
(888-4-POMLAW) by E-mail: agtolan@pomlaw.com or visit the firm's Web
site: http://www.pomlaw.com
NTL INC.: Scott + Scott Lodges Securities Fraud Suit in S.D. California
-----------------------------------------------------------------------
Scott + Scott LLC initiated a securities class action lawsuit on behalf
of purchasers of the securities of NTL, Inc. (NYSE: NLI) between August
9, 2000 and November 29, 2001, inclusive, in the United States District
Court, Southern District of New York against the Company and:
(1) George S. Blumenthal,
(2) J. Barclay Knapp,
(3) Steven Carter and
(4) John F. Gregg
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 a series of material misrepresentations to the
market between August 9, 2000 and November 29, 2001, thereby
artificially inflating the price of Company securities.
The suit alleges that, throughout the class period, defendants issued a
series of materially false and misleading statements, which failed to
disclose, among other things:
(i) that the Company was unable to effectively integrate its
acquisitions and, as a result was experiencing substantial
difficulties in operating its business;
(ii) that the Company was not fully funded until 2003, and as a
result of its massive debt burden would necessarily have to
restructure its debt;
(iii) that the Company was underreporting churn rates by failing to
report terminations and by continuing to bill customers for
accounts which they had terminated, thereby creating the false
impression that the Company was retaining customers longer and
that migrations were decreasing; and
(iv) that the Company was improperly delaying the write-down of
billions of dollars of impaired assets, thereby artificially
inflating the Company's operating results.
Indeed, after the end of the class period, the Company announced that
it would write off over $11 billion of goodwill and other asset
impairments prior to reporting fourth quarter financial results, which
would result in an astounding loss per share for the fourth quarter
2001 of $46.46 per share.
For more details, contact Neil Rothstein or David R. Scott by Phone:
800-404-7770 by E-mail: nrothstein@scott-scott.com or drscott@scott-
scott.com or visit the firm's Web site: http://www.scott-scott.com
PEREGRINE SYSTEMS: Scott + Scott Commences Securities Suit in S.D. CA
---------------------------------------------------------------------
Scott + Scott, LLC initiated a securities class action on behalf of
purchasers of the securities of Peregrine Systems, Inc. (Nasdaq: PRGN)
from July 19, 2000 through April 30, 2002, inclusive, in the United
States District Court, Southern District of California.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning the
Company's business and financial condition thereby artificially
inflating the price of Company securities. The Company's former
outside auditor, Arthur Andersen LLP, is also named as a defendant.
Specifically, as alleged in the complaint, plaintiff and the class were
injured as a result of defendants' misrepresentations, omissions and
other fraudulent conduct alleged. Company stock began its decline on
May 1, 2002 following the Company's April 30, 2002 announcement that
the release of the its fiscal fourth quarter and year end financial
results would be delayed pending the completion of an audit by new
outside auditor KPMG. Upon this announcement, Company stock fell nearly
50% to close at $3.45.
On May 6, 2002 the facts regarding the Company's financial condition,
which were previously concealed or hidden, were revealed to the public.
On this date, the Company shocked the market by announcing that its
Board of Directors had authorized an internal investigation into
accounting inaccuracies, totaling as much as $100 million, which KPMG
had brought to the attention of the audit committee.
Simultaneously, the Board of Directors announced that the Company's
Chairman of the Board and Chief Executive Officer and its Chief
Financial Officer had both resigned all of their positions with the
Company. Following this announcement, Company stock fell an additional
61% to close at $1.01. As a result of defendants' misconduct, alleged,
plaintiff and the class have suffered substantial damages.
For more information, contact Neil Rothstein or David R. Scott by
Phone: 800-404-7770 by E-mail: nrothstein@scott-scott.com or
drscott@scott-scott.com or visit the firm's Web site: http://www.scott-
scott.com
PEREGRINE SYSTEMS: Cauley Geller Commences Securities Suit in S.D. CA
---------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Southern District of
California on behalf of purchasers of Peregrine Systems Inc. (Nasdaq:
PRGN) common stock during the period between July 19, 2000 and April
30, 2002, inclusive.
The complaint charges the Company and certain of its officers and
directors with issuing false and misleading statements concerning its
business and financial condition, thereby artificially inflating the
price of its securities. The Company's former outside auditor, Arthur
Andersen LLP, is also named as a defendant.
Specifically, as alleged in the complaint, plaintiff and the class were
injured as a result of defendants' misrepresentations, omissions and
other fraudulent conduct alleged. Company stock began its decline on
May 1, 2002 following the Company's April 30, 2002 announcement that
the release of its fiscal fourth quarter and year end financial results
would be delayed pending the completion of an audit by new outside
auditor KPMG. Upon this announcement, Company stock fell nearly 50% to
close at $3.45.
On May 6, 2002 the facts regarding the Company's financial condition,
which were previously concealed or hidden, were revealed to the public.
On this date, the Company shocked the market by announcing that its
Board of Directors had authorized an internal investigation into
accounting inaccuracies, totaling as much as $100 million, which KPMG
had brought to the attention of the audit committee.
Simultaneously, the Board of Directors announced that the Comapnys'
Chairman of the Board and its Chief Financial Officer had both resigned
all of their positions with the Company. Following this announcement
Company stock fell an additional 61% to close at $1.01. As a result of
defendants' alleged misconduct, plaintiff and the class have suffered
substantial damages.
For more information, contact Jackie Addison, Sue Null or Shelly
Nicholson by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone:
888-551-9944 by E-mail: info@classlawyer.com or visit the firm's Web
site: http://www.classlawyer.com/pr/peregrine--systems.pdf
PEREGRINE SYSTEMS: Slotnick Shapiro Files Securities Suit in S.D. CA
--------------------------------------------------------------------
Slotnick, Shapiro & Crocker LLP initiated a securities class action
alleging securities fraud in the United States District Court for the
Southern District of California against Peregrine Systems, Inc.
(Nasdaq: PRGN) and certain of its officers and directors. The suit was
filed on behalf of all persons who purchased the Company's securities
during the period July 19, 2001 through May 6, 2002, inclusive.
The suit alleges that Defendants violated Section 10(b) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
and Section 20(a) of the Exchange Act, by making materially false and
misleading statements regarding the Company and its audit activities.
On Monday, May 6, 2002, the Company announced that its Board of
Directors had authorized an internal investigation into accounting
inaccuracies totaling as much as $100 million. The Company disclosed
that these transactions and other accounting matters to be investigated
may impact financial results for periods in fiscal 2002 and prior.
Simultaneously, the Board of Directors announced that the Company's
Chairman of the Board and Chief Executive Officer and its Chief
Financial Officer had both resigned all of their positions with the
Company.
For more details, contact Stephen D. Oestreich by Mail: 100 Park
Avenue, 35th Floor, New York, NY 10017 by Phone: 212-687-5000 or
888-367-5291 by Fax: 212-687-3080 or by E-Mail: frivera@sscny.com
PEREGRINE SYSTEMS: Entwistle Cappucci Files Securities Suit in S.D. CA
----------------------------------------------------------------------
Entwistle & Cappucci LLP lodged a securities class action for
violations of the federal securities laws in the United States District
Court for the Southern District of California on behalf of all persons
who purchased Peregrine Systems, Inc. (NASDAQ: PRGN) common stock or
traded options between July 19,2000 and May 6,2002. The suit names as
defendants the Company and:
(1) Stephen P. Gardner,
(2) Matthew C. Gless and
(3) John J. Moores
The suit alleges that defendants violated Sections 10(b) and 20(a) of
the Exchange Act by improperly recording revenues during the class
period in order to artificially inflate the price of the Company's
common stock.
The defendants failed to inform investors that the "record" sales and
revenue figures that the Company reported during the class period were
allegedly the product of improper accounting procedures. During the
class period, defendants utilized the Company's inflated stock value to
consummate key acquisitions of companies with complimentary lines of
business.
In addition, defendants, along with other senior officers and directors
of the Company, capitalized on the artificially inflated stock value by
selling over 4 million shares of the Company's common stock for
proceeds exceeding $111 million.
On April 30, 2002, the Company announced it would delay the release of
its financial results for the fiscal fourth quarter and full year ended
March 31, 2002. In response to that announcement the price of the
Company's common stock plummeted over 50%, to close at $3.45 per share
on May 1, 2002.
On May 6, 2002, the Company announced that its Board of Directors had
authorized its audit committee to conduct an internal investigation
into potential accounting inaccuracies regarding its reported revenues.
The Company indicated that, based upon the preliminary information
reviewed to date, its improper revenue recognition may total as much as
$100 million in transactions that were initially recorded as revenues
during fiscal years 2001 and 2002. Also on May 6, 2002, the Company
announced that its Chief Executive Officer, defendant Gardner, and its
Chief Financial Officer, defendant Gless, had resigned from their
positions, effective immediately.
In response to these negative announcements, the price of the Company's
common stock dropped even further, to close at $0.89 per share on May
6, 2002. During the class period, Company common stock traded as high
as $35 per share.
For more details, contact Vincent R. Cappucci by Mail: 299 Park Avenue,
14th Floor, New York, New York 10171 by Phone: 212-894-7200 or visit
the firm's Web site: http://www.entwistle-law.com
PEREGRINE SYSTEMS: Berman DeValerio Lodges Securities Suit in S.D. CA
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Berman DeValerio Pease Tabacco Burt & Pucillo initiated a securities
class action against Peregrine Systems, Inc. (Nasdaq:PRGN) in the
United State District Court for the Southern District of California,
claiming that the company inflated its stock price by misleading the
public.
The suit, filed on behalf of all investors who bought the Company's
common stock from July 19, 2000 through May 3, 2002,charged the Company
of misleading investors about its business and finances by improperly
recording revenue it later wrote off.
The complaint states that news of the problems came to light May 6,
2002, when the Company disclosed an internal investigation into
potential accounting inaccuracies in fiscal 2001 and 2002, revenue
recognition irregularities that could total up to $100 million. In the
same statement, the Company announced the resignations of Stephen
Gardner, its chief executive officer, and Matthew Gless, its executive
vice president of finance. The suit names Mr. Gardner and Mr. Gless as
individual defendants.
Following the May 6 announcement, the Company's stock plummeted 65% to
a 52-week low of $0.89.
For more details, contact Julie Richmond or Michael G. Lange by Mail:
One Liberty Square, Boston, MA 02109 by Phone: 800-516-9926 by E-mail:
law@bermanesq.com or visit the firm's Web site:
http://www.bermanesq.com.
PEREGRINE SYSTEMS: Schiffrin & Barroway Lodges Securities Suit in CA
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Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the Southern District of California on
behalf of all purchasers of the common stock of Peregrine Systems, Inc.
(Nasdaq: PRGN) from July 19, 2000 through April 30, 2002, inclusive.
The suit charges the Company and certain of its officers and directors
with issuing false and misleading statements concerning the Company's
business and financial condition thereby artificially inflating the
price of the Company securities. The Company's former outside auditor,
Arthur Andersen LLP, is also named as a defendant.
Specifically, as alleged in the complaint, the plaintiff and the class
were injured as a result of defendants' misrepresentations, omissions
and other fraudulent conduct alleged. Company stock began its decline
on May 1, 2002 following the Company's April 30, 2002 announcement that
the release of the its fiscal fourth quarter and year end financial
results would be delayed pending the completion of an audit by new
outside auditor KPMG. Upon this announcement, Company stock fell
nearly 50% to close at $3.45.
On May 6, 2002 the facts regarding the Company's financial condition,
which were previously concealed or hidden, were revealed to the public.
On this date, the Company shocked the market by announcing that its
Board of Directors had authorized an internal investigation into
accounting inaccuracies, totaling as much as $100 million, which KPMG
had brought to the attention of the audit committee.
Simultaneously, the Board of Directors announced that the Company's
Chairman of the Board, Chief Executive Officer and its Chief Financial
Officer had both resigned all of their positions with the Company.
Following this announcement Company stock fell an additional 61% to
close at $1.01. As a result of defendants' misconduct, alleged,
plaintiff and the class have suffered substantial damages.
For more details, contact Marc A. Topaz or Stuart L. Berman by Mail:
Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 by E-mail: info@sbclasslaw.com
or visit the firm's Web site: http://www.sbclasslaw.com
PEREGRINE SYSTEMS: Chitwood & Harley Lodge Securities Suit in S.D. CA
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Chitwood & Harley initiated a securities class action in the United
States District Court for the Southern District of California on behalf
of all persons who purchased the common stock of Peregrine Systems,
Inc. (NASDAQ: PRGN) between July 19, 2000 and May 3, 2002, inclusive.
The suit charges the Company and certain of its officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint
alleges that during the class period, defendants misled their investors
by issuing false and misleading statements and failing to disclose
material facts about the Company's business.
Defendants misrepresented the truth about, inter alia, the Company's
improper accounting practices that artificially inflated its reported
revenues. Throughout the class period, the Company reported revenues
and profits in-line with or exceeding analyst expectations.
In reality, however, the Company was only able to meet those
expectations by engaging in improper revenue recognition practices that
artificially boosted its reported financial results. As a result, class
members paid more for Company stock than they would have if the truth
had been disclosed.
On May 6, 2002, the Company dropped two bombshells on the investing
public. First, it disclosed that it was looking at "potential
accounting inaccuracies" brought to the attention of the audit
committee by the Company's independent auditors. Second, the Company
announced the resignation of its Chairman and Chief Executive Officer
and its Chief Financial Officer.
Consequently, after trading at more than $35 per share during the class
period, the price of the Company's common stock sank to $0.89 per
share, a 52-week low and more than a 65% drop from the stock's closing
price on May 3, 2002, before the disclosures.
For more details, contact Martin D. Chitwood or Nikole Davenport by
Phone: 888-873-3999 (toll-free) or 404-873-3900 by Mail: 2900 Promenade
II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309 by E-mail:
nmd@classlaw.com or visit the firm's Web site: http://www.classlaw.com.
TURNSTONE SYSTEMS: Plaintiffs File Amended Consolidated Suit in N.D. CA
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Plaintiffs in the securities class actions filed against Turnstone
Systems, Inc. in the United States District Court for the Northern
District of California, filed an amended consolidated complaint
charging the Company, certain of its current and former officers and
directors and underwriters of its September 21,2000 initial public
offering (IPO), of federal securities law violations.
The first suit was commenced in March 2001 by the Louisiana School
Employees' Retirement System, alleging claims under Sections 11,
12(a)(2) and 15 of the Securities Act of 1933. The suit alleges that
the defendants issued false and misleading statements in our prospectus
issued in connection with our secondary offering.
Four other substantially similar securities suits followed. These
latter complaints allege that the defendants made false or misleading
statements during the class period of June 5, 2000 through January
2, 2001, in violation of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
All five cases were consolidated before Judge Saundra B. Armstrong in
October 2001. By order dated December 3, 2001, Judge Armstrong
designated Radiant Advisors, LLC as lead plaintiff and the law firms of
Berstein Litowitz Berger & Grossman LLP and Bernstein Liebhard
& Lifshitz, LLP as co-lead counsel for the consolidated actions.
Plaintiffs filed consolidated amended complaints on March 19, 2002.
The Company intends to vigorously defend against the suit, but cannot
give any assurance about the litigation's results.
TURNSTONE SYSTEMS: Plaintiffs File Second Amended Derivative Suit in CA
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Plaintiffs in the shareholder derivative lawsuit against Turnstone
Systems, Inc. filed a second amended suit after the California State
Court, County of Santa Clara, dismissed without prejudice the first
amended suit.
The suit was commenced in June 2001 by nominal plaintiff Bert Okino
against the Company, a nominal defendant in the action, and certain of
its officers and directors. The suit alleges that the individual
defendants caused the Company harm by either making or permitting the
Company to make false and misleading statements between June 5, 2000
and January 2, 2001 and by permitting certain officers to profit from
stock sales during that period. The suits assert claims against the
individual defendants for:
(1) breach of fiduciary duty,
(2) waste of corporate assets,
(3) abuse of control and
(4) gross mismanagement
The Company demurred to the complaint and in September 2001, Judge
Conrad L. Rushing issued an order sustaining the demurrer and granting
plaintiff limited discovery. Subsequent to the completion of the
court-ordered discovery, plaintiff filed a first amended derivative
complaint alleging the same causes of action asserted in the initial
complaint.
The Company then filed a demurrer to the first amended derivative
complaint on January 10, 2002. On February 22, 2002, Judge Jack Komar
issued an order sustaining the demurrer and granting plaintiff leave to
amend its complaint. Plaintiff filed an amended complaint on March 19,
2002.
TURNSTONE SYSTEMS: To Mount Vigorous Defense V. Securities Suit in NY
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Turnstone Systems, Inc. faces a securities class action pending in the
United States District Court for the Southern District of New York on
behalf of a class of individuals who purchased the Company's common
stock in the initial public offering between January 31 and December 6,
2000. The suit alleges claims against the Company, certain of its
current and former officers and directors, and the underwriters of its
initial public offering.
The suit alleges generally that the prospectus under which such
securities were sold contained false and misleading statements with
respect to discounts and commissions received by the underwriters and
asserts claims against the defendants under Sections 11, 12(a)(2) and
15 of the Securities Act of 1933, and Section 10(b) of the Exchange Act
of 1934.
The case has been coordinated for pre-trial purposes with over 300
cases raising the same or similar issues and also currently pending in
the Southern District of New York. To date, there has been no lead
plaintiff appointed to prosecute the action. The Company intends to
vigorously oppose the suit but cannot give any assurance that it will
be successful in our defense of, these claims.
UNIVERSAL ACCESS: Milberg Weiss Commences Securities Suit in E.D. TX
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Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class
action on behalf of purchasers of the securities of Universal Access
Global Holdings, Inc. (NASDAQ: UAXS) between May 10, 2001 and April 24,
2002 inclusive, in the United States District Court for the Eastern
District of Texas, Lufkin Division, against the Company and:
(1) Patrick C. Shutt, CEO and Chairman,
(2) Robert M. Brown, CFO,
(3) Robert E. Rainone, Jr., President of Global Operations for
Universal Access,
(4) George A. King, President of Client Services of Universal
Access,
(5) Robert J. Pommer, Vice Chairman,
(6) Scott D. Fehlan, General Counsel and Secretary and
(7) Paolo Guidi, Director
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, by issuing a series of materially false and misleading
statements to the market between May 10, 2001 and April 24, 2002. The
suit alleges that defendants failed to adequately disclose the
Company's adoption of a new business model and the attendant and
material risks facing it as a result.
In addition, the complaint alleges that the Company issued financial
statements, which violated generally accepted accounting principles
(GAAP), by improperly recording revenue for contingent contracts.
In addition, the complaint alleges that the Company also improperly
recognized revenue for "capacity swaps" with other communications
companies, which had no real business purpose and artificially inflated
its reported revenues.
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: universalaccesscase@milbergNY.com or
visit the firm's Website: http://www.milberg.com
UNIVERSAL ACCESS: Bernard Gross Commences Securities Suit in E.D. TX
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Bernard M. Gross PC initiated a securities class action in the Lufkin
Division of the United States District Court for the Eastern District
of Texas on behalf of all purchasers of the common stock of Universal
Access, Inc. or Universal Access Global Holdings, Inc. (Nasdaq:UAXS)
between May 10, 2001 and March 22, 2002, against the Company and
certain of its officers and directors seeking remedies under the
Securities Act of 1934.
The suit charges the Company and certain of its officers and directors
with issuing a series of material misrepresentations to the market
during the class period, failing to adequately disclose a change in the
Company's business model and the risks involved in that change, and
issuing financial statements that violated generally accepted
accounting principles (GAAP), thereby artificially inflating the price
of the Company's publicly traded securities.
The alleged GAAP violations include recording revenue for contingent
contracts and for "capacity swaps" with other telecommunications
companies. As alleged in the suit, these capacity swaps were merely a
trading of services, which had no real business purpose other than to
artificially inflate the revenues of the participating companies.
The complaint alleges that these actions violated sections 10(b) and
20(a) of the Securities Exchange Act of 1934.
For more details, contact Susan Gross or Deborah R. Gross by Mail: 1515
Locust Street, 2nd Floor, Philadelphia, PA 19102 by Phone:
800-849-3120(toll-free) or 866-561-3600(toll-free) or 215-561-3600 by
E-mail: susang@bernardmgross.com or debbie@bernardmgross.com or visit
the firm's Web site: http://www.bernardmgross.com
US TIMBERLANDS: Six Suits Withdrawn as Privatization Details Change
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Plaintiffs in the six securities class actions against US Timberlands
Co. LP relating to the possibility of taking the Company private have
withdrawn their suits, pending further developments in the proposal.
The suits were filed in the Delaware Court of Chancery for New Castle
County in November 2000 against the Company, US Timberlands Services
Company LLC, the Company's general partner and its Board of Directors.
The filing followed the Company announcement that a group led by senior
management had begun the process to explore Company privatization.
The suits, filed on behalf of all other unitholders of the Company,
charged the defendants with breach of fiduciary duty and self-dealing.
In February 2001, management put forward a formal offer for the
privatization transaction at $7.75 per unit in cash and notes. In
November 2001, management amended its offer to $3.75 per unit.
VIROPHARMA INC.: Bernstein Liebhard Lodges Securities Suit in E.D. PA
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Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf of all persons who purchased or acquired ViroPharma, Inc.
(NASDAQ: VPHM) securities between July 13, 1999 and March 19, 2002, in
the United States District Court, Eastern District of Pennsylvania.
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 a series of material misrepresentations to the
market between July 13, 1999 and March 19, 2002, thereby artificially
inflating the price of Company securities.
Specifically, the complaint alleges that throughout the class period,
defendants issued multiple statements which highlighted the successful
clinical trials of Picovir (pleconaril), a drug the Company had
developed to cure the common cold, and led investors to believe that
pleconaril faced minimal, if any, hurdles prior to being approved by
the US Food & Drug Administration (FDA) for marketing and production.
As alleged in the suit, these statements, however, were materially
false and misleading because they failed to disclose, among other
things, that:
(1) pleconaril might produce resistant strains of the cold virus,
especially in patients who take the drug incorrectly;
(2) pleconaril shows evidence of reducing the effectiveness of
oral contraceptives, raising the risk of unwanted pregnancies;
(3) some female users of pleconaril experienced excessive
bleeding;
(4) pleconaril had not proved to be successful with smokers with
colds; and
(5) as a result of all of these safety concerns, it was very
unlikely that pleconaril would be approved by the FDA for
marketing and production.
On March 19, 2002, the last day of the class period, the Company issued
a press release announcing that the Antiviral Drugs Advisory Committee
of the FDA voted against recommending pleconaril for approval.
According to the press release, the committee requested that the
Company provide additional data, which had not been included in the
pivotal trials, before the drug could be recommended for approval.
Following this announcement, shares of the Company were halted for
trading.
On March 20, 2002, when the stock reopened for trading, shares of the
Company declined significantly, falling almost $8 per share to close at
$5.50 per share, an incredible 60% decline from its previous close of
$13.41.
For more details, contact Ms. Linda Flood, Director of Shareholder
Relations by Mail: 10 East 40th Street, New York, New York 10016 by
Phone: 800-217-1522 or 212-779-1414 by E-mail: VPHM@bernlieb.com or
visit the firm's Web site: http://www.bernlieb.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 2002. All rights reserved. ISSN 1525-2272.
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