/raid1/www/Hosts/bankrupt/CAR_Public/020527.mbx
C L A S S A C T I O N R E P O R T E R
Monday, May 27, 2002, Vol. 4, No. 103
Headlines
AGENT ORANGE: Korean Court Dismisses Suit of 17T Vietnam War Veterans
ARIZONA: New Law Gives Home Builders Three Months To Fix Problems
COLORADO: Denver Judge Dismisses Appeal in Photo-Radar Program Suit
COST PLUS: Employees File Overtime Wage Suit In California State Court
EXXON MOBIL: Settles For $20M Suit Over Texas Oil and Gas Royalties
GRANT GEOPHYSICAL: Discovery Commences In Suit Over TX Mineral Estates
JOHN CHEZIK: Faces Suit Over 100% Money Back Guarantee in Kansas Court
LANE BRYANT: Former Employee Files Overtime Wage Suit in CA State Court
LOCKFORMER COMPANY: Agrees To Settle TCE Pollution Suit For $10 Million
MALLALIEU-GOLDER: Court Expands Class To Six States in Investors Suit
NCS PEARSON: MN Judge Limits Damages In Suit Over Skills Testing Error
TOBACCO LITIGATION: Court Says Individuals Not Entitled To Settlement
TRANS WORLD: Faces Consolidated Music Antitrust Suit in Maine Court
TERRORIST ATTACK: Pres. Bush, Officials Accused of Negligence in Suit
U.S. GYPSUM: Damage Suits Stayed After Parent Files Ch. 11 Bankruptcy
U.S. CUSTOMS: Agents Cite Instances of Racial Discrimination in Bureau
Securities Fraud
ADELPHIA BUSINESS: Berger & Montague Launches Securities Suit in PA
CMS ENERGY: Shareholders Commence Suit For Securities Act Violations
dELiA*s INC.: DE Court Approves $6.3M Securities Suit Settlement
dELiA*s INC.: NY Court Grants Certification To Securities Fraud Suit
DOV PHARMACEUTICAL: Mounting Vigorous Defense Against Suits in NY, NJ
FREEMARKETS INC.: PA Court Yet To Decide on Securities Suit Dismissal
FREEMARKETS INC.: Underwriters' Commissions, Agreements Suits' Subjects
GOLDMAN SACHS: eToys Files Suit Over Role in May 1999 Public Offering
IRVINE SENSORS: Deems Securities Suits "Without Merit" in S.D. CA
KINROSS GOLD: Cohen Milstein Commences Securities Fraud Suit in Nevada
MERRILL LYNCH: Kaplan Fox Commences Securities Fraud Suit in S.D. NY
MERRILL LYNCH: Schiffrin & Barroway Commences Securities Suit in NY
PRE-PAID LEGAL: OK Judge Won't Reconsider Securities Suit Dismissal
PEDIATRIC SERVICES: GA Court Grants Approval To $3.2M Suit Settlement
PEREGRINE SYSTEMS: Leo Desmond Commences Securities Suit in S.D. CA
RESOURCES ACCRUED: Court Rejects Settlement, Sets New Fairness Hearing
SALOMON SMITH: Adopting Changes in Stock Analyst Compensation Schemes
SEITEL INC.: Wolf Haldenstein Initiates Securities Suit in S.D. TX
SEITEL INC.: Leo Desmond Commences Securities Fraud Suit in S.D. TX
UNIVERSAL ACCESS: Wolf Haldenstein Commences Securities Suit in N.D. IL
VERISIGN INC.: Marc Henzel Commences Securities Fraud Suit in N.D. CA
VIROPHARMA INC.: The Emerson Firm Launches Securities Fraud Suit in PA
*********
AGENT ORANGE: Korean Court Dismisses Suit of 17T Vietnam War Veterans
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The Seoul District Civil Court ruled against 17,000 Vietnam War
veterans, Thursday in a class action suit in September 1999 against Dow
Chemicals and Monsanto Corporation, seeking 5 trillion Korean won for
injuries and illness they claimed were associated with exposure to the
defoliant Agent Orange, manufactured by the two companies and used
extensively during the Vietnam War, Chosun.com reports.
In its ruling, the Court said there was no definitive scientific link
between the diseases and the chemical, noting that proportionally the
numbers afflicted were similar to sufferers of the same condition in
the general population, according to a Chosun.com report. It added that
the plaintiffs had also failed to prove that they had received
substantial exposure to the defoliant.
The Court continued that there was the possibility the veterans had
mistaken ordinary pesticide for Agent Orange, saying also that the
statute of limitations for such a case (10 years) had already passed.
With regard to reports that dioxin present in Agent Orange were linked
to certain diseases, the court said these only raised possibilities and
did not provide a causative chain.
Lawyers for the plaintiffs said they would appeal the ruling, saying
the Court only accepted documents presented by the companies involved
and the US government position, according to Chosun.com. Chief Judge
Kim Hee-tae, said that while he recognized the suffering of the
plaintiffs, the Court had to follow a strict interpretation of the law,
and added that he wished the Court had more time to study the case.
ARIZONA: New Law Gives Home Builders Three Months To Fix Problems
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Arizonians who find problems with their new homes are now required to
give builders at least three months to fix the problems before they can
sue, the Associated Press Newswires reports. Governor Jane Hull has
signed a bill that creates a formal process for fixing construction
defects. One of the chief purposes of this legislation is to provide
home builders a way to avoid the class actions, brought by homeowners
claiming defective construction.
If builders or buyers do not follow that process, it could be used
against them when they go to court. Additionally, if a case does
reach the courts, the prevailing side will be awarded fees for
attorneys, experts and other reasonable expenses.
The new law attempts to resolve construction defect problems that have
generated anger and frustration during Arizona's rapid population
growth. However, homeowners with safety issues or life-threatening
problems can still go straight to court. A homeowner has up to eight
years to file a complaint.
Builders must inform new homeowners in bold print that the state
Registrar of Contractors is available to arbitrate complaints. The new
law, signed by Governor Hull, will take effect 90 days after the
Legislature ends its current session.
COLORADO: Denver Judge Dismisses Appeal in Photo-Radar Program Suit
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In a second or even third act of the controversy over Denver's photo-
radar program, a Denver judge has dismissed the City's appeal of a
county court's ruling that declared the program illegal, the Associated
Press Newswires reported. The class action that seeks refunds of all
fines paid under the program since 1998 is still pending, however.
Federal Judge Joseph Meyer said in a recent ruling that the city can
only appeal county court rulings dismissing traffic tickets when a
statute is declared unconstitutional or unenforceable. Assistant City
Attorney Scott Johnson said the city hasn't decided whether to appeal
Judge Meyer's ruling.
Denver suspended photo radar after County Judge Mary Celeste ruled that
it was illegal because tickets were not issued by police. A private
contractor prepared and sent the summonses to the drivers. The program
also violates state law by appearing to compensate the contractor based
on the volume of tickets issued, Judge Celeste said.
City officials said, however, that photo radar vans will be back on the
streets by this summer. A bill expected to be signed by Governor Bill
Owens outlaws use of photo radar on highways, but allows it in
residential neighborhoods, school zones and areas near parks. The new
measure also says that city employee must operate photo-radar programs.
COST PLUS: Employees File Overtime Wage Suit In California State Court
----------------------------------------------------------------------
Cost Plus, Inc. faces a purported class action pending in the Orange
County Superior Court in California, alleging it improperly classified
certain California-based managers as "exempt" from overtime rather than
entitled to overtime pay as are non-exempt hourly employees.
The suit is in the discovery stage and a hearing has yet to be held on
the plaintiff's motion for class certification. The Company believes
the plaintiff is not entitled to class certification and intends to
vigorously oppose the motion.
Furthermore, the Company believes it has strong defenses against the
charges contained in the lawsuit, which it will also vigorously pursue.
Although this lawsuit is subject to the uncertainties inherent in the
litigation process, based upon information presently available to
management, the Company does not expect the ultimate resolution of the
action will have a material effect on its financial condition.
EXXON MOBIL: Settles For $20M Suit Over Texas Oil and Gas Royalties
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Exxon Mobil agreed to settle for US$20 million a class action filed on
behalf of about 1,600 royalty owners in West Texas, charging the
Company with failing to pay proper royalties over two decades for
interests in Winkler, Ward, Pecos, Loving and Reeves counties, the
Associated Press reports.
"There are differing views on how to calculate royalties on oil and gas
leases due to the complexity of the business and the specialized nature
of most royalty agreements," Company spokesman Bob Davis told the
Houston Chronicle. "We felt the settlement was a preferable course of
action as opposed to extended litigation."
The royalty owners alleged the Company did not reasonably market the
natural gas produced from the wells and failed to pay proper royalties
for the gas produced from the wells from 1970 to 1990.
GRANT GEOPHYSICAL: Discovery Commences In Suit Over TX Mineral Estates
----------------------------------------------------------------------
Discovery has begun in the class action pending against Grant
Geophysical, Inc. in the 229th Judicial District Court, in Starr County
Texas, filed by two Starr County residents. The suit also names as
defendants:
(1) Grant Geophysical Corp.,
(2) Millennium Seismic, Inc. and
(3) Seitel, Inc.
The suit alleges that the Company and Millennium Seismic, Inc. obtained
geophysical information about plaintiffs' mineral estates without
permission while conducting 3-D surveys in Texas. They further allege
that the Company licensed that information to third parties and
eventually sold it to Seitel in 2001.
No dates have yet been set for a class certification hearing or trial
on the merits. The Company has denied liability, believes the claims
are without merit, and intends to defend against the suit vigorously.
Management of the Company does not believe that any liabilities
resulting from any such current proceedings will have a material
adverse effect on its financial position, cash flows, or results of
operations.
JOHN CHEZIK: Faces Suit Over 100% Money Back Guarantee in Kansas Court
----------------------------------------------------------------------
John Chezik Homerun, Inc., which operates John Chezik Honda faces a
class action filed by its customers in Clay County Circuit Court
relating to a "100 percent money-back guarantee" that the Company
offered on its vehicle service contracts, the Business Journal reports.
Lawfirm Blackwell Sanders Peper Martin LLP commenced the suit on behalf
of plaintiffs Keith and Deborah Shackelford, who bought a 1995 Honda
Accord from the Company. The Shackelfords also bought a service
contract, which said a customer would be refunded the entire cost of
the contract if no claims were made on it.
According to the Business Journal, the Shackelfords said they made no
claims. They returned to the dealership in April 2002 to request their
refund but allegedly were told they could receive only credit toward
another car purchase. The dealership offered to refund the
Shackelfords' money after talks with their lawyers, but the Company
refused to pay legal fees and other costs.
"We'll deny the allegations, and we'll answer that," said the
dealership's lawyer, Bob Jester of Ensz & Jester PC. "Blackwell Sanders
Peper Martin wants to generate some fees, so I guess that's why we have
a lawsuit."
LANE BRYANT: Former Employee Files Overtime Wage Suit in CA State Court
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Lane Bryant, Inc. faces a class action filed in the Alameda Superior
Court in California by a terminated store employee, on behalf of
herself and all of the Company's California store sales managers.
The plaintiff alleges that she was misclassified as an exempt employee
and that she was entitled to be paid overtime which she had not
received. She further asserted that the class members were also
misclassified and entitled to overtime.
Because the investigation of the case and the discovery phase of the
proceedings are at their initial stages, it is premature to speculate
on the potential risk this suit presents to the Company. The Company
intends to vigorously defend this suit.
LOCKFORMER COMPANY: Agrees To Settle TCE Pollution Suit For $10 Million
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Lockformer Company agreed to settle for US$10 million a class action
filed against it on behalf of residents in Dupage County, Illinois, who
allege that the Company's Lisle Illinois facility leaked
trichloroethylene (TCE), a toxic solvent, into their groundwater. The
suit also named as defendants other divisions of the company, including
Met-Coil Corp. and Mestek Inc., as well as Honeywell International,
which owned the company that formerly supplied chemicals to Lockformer.
After a two-week trial, the Company decided to settle the suit rather
than take its chances with a jury. The settlement will provide enough
money for residents to abandon wells that were contaminated with TCE
and instead connect to untainted municipal water systems, attorneys
told the Chicago Sun-Times.
"I am thrilled," said Teresa LeClercq, who lives near the Lockformer
plant and was a plaintiff in the suit. "People are getting compensated
and hooked up to clean water."
Under the settlement, the Company will also provide money to seal
basements of nearby homes to prevent TCE vapors from seeping in and
compensate residents for lowered property values and for their
aggravation in dealing with the situation, a lawyer for the plaintiffs
said.
"This is a group of people who need to repair their homes and repair
their lives," Shawn M. Collins of Naperville, one of the lawyers
representing the Lisle area residents told the Chicago Sun-Times.
About 110 families have not hooked in to municipal water systems
because of the cost, estimated at $8,000 to $10,000 per home.
Company attorney Daniel Biederman said the Company was "very pleased
with this settlement. We regret this issue has caused a divide between
Lockformer and the community."
MALLALIEU-GOLDER: Court Expands Class To Six States in Investors Suit
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A lawsuit against a troubled investment trust based in Williamsport,
Pennsylvania, has been made a class action to include investors who
live throughout Pennsylvania and six other states, The Harrisburg
Patriot has reported. Presiding Judge Kenneth D. Brown formalized the
order for creation of class action status for the lawsuit, after
attorneys for defendant Mallalieu-Golder Financial Services Inc.
registered the firm's approval.
Premium Finance Trust, a division of Mallalieu-Golder Financial
Services Inc., has about $136,000 remaining in assets and obligations
of $6 million, according to attorneys involved in the litigation in
Lycoming County Court.
To date, it has been determined the trust has investors in
Pennsylvania, New Jersey, Delaware, Florida, Rhode Island, Arizona and
North Carolina. Problems with the trust became known when David L.
Eakin, who is now running Mallalieu-Golder, wrote in an April 10 letter
to investors that the amount of the obligations "far exceeds" the
assets available to pay them.
The letter points out that trust President Larry Fiorini handled all
operations, and when he died "I was astounded to find out the enormity
of the Premium Finance Trust." Disbursements have stopped, and it is
not known when they will resume, Mr. Eakin wrote.
Many investors have lost sizeable amounts. Paolu lawyer, Thomas Myers,
told Judge Kenneth D. Brown that he represent 45 to 50 investors who
are owed a total of $2.5 million.
Judge Brown previously signed an order placing in escrow the remaining
money in the trust, and $1.2 million of Mr. Fiorini's $1.5 million life
insurance policy on which Mallalieu-Golder was the beneficiary. A
hearing will be held on the status of the remaining $300,000.
NCS PEARSON: MN Judge Limits Damages In Suit Over Skills Testing Error
----------------------------------------------------------------------
Hennepin County, Minnesota District Judge Allen Oleisky ruled that
students wrongly flunked by the scoring error in the 2000 Basic Skills
math test cannot seek punitive damages against testing company NCS
Pearson, the St. Paul Pioneer Press reported recently. The ruling
limits what the students and their families can seek in a trial later
this summer to their actual damages because of the scoring mistake.
The scoring error in the Minnesota Basic Skills Test in math, reading
and writing was caused by a misaligned scoring key. It resulted in
nearly 8,000 students, including 518 high school seniors, being told
they had flunked the test when they actually passed it.
In his ruling, Judge Oleisky said there is evidence that the Company,
did not devote the attention it needed to the Minnesota testing
contract. However, he said, there was no evidence that Company
officials knew they had placed a defective product on the market.
"There is no evidence that NCS, or any NCS official, acted with malice
or willfully or intentionally failed to act to either detect or fix the
error," Judge Oleisky said.
Company officials were pleased with the decision, and its spokesman
David Hakensen said, "NCS never denied it made a mistake, and it
quickly moved to remedy it."
Shawn Raiter, the lead attorney in the suit, said he is still gathering
evidence to prepare for the trial and hoped to renew his motion for
punitive damages later.
TOBACCO LITIGATION: Court Says Individuals Not Entitled To Settlement
---------------------------------------------------------------------
A federal judge has upheld rulings by courts in South Carolina, North
Carolina, and West Virginia, rejecting lawsuits that have asked the
respective states to give some of the money from the national tobacco
settlement to individuals, The Associated Press has reported recently.
In a recent opinion, the 4th US Circuit Court of Appeals ruled that
federal law "bars any recovery by individual Medicaid recipients to a
share of the money the states receive under the Master Settlement
Agreement."
The ruling by the Appeals Court affirms rulings handed down in class
action brought by smokers and Medicaid recipients seeking some of the
billions of dollars the three states are expected to receive over the
next 25 years under the settlement with cigarette makers.
In their lawsuits, the plaintiffs argued that because the national
settlement was set up as a repayment to the states of money spent by
Medicaid, participants should be entitled to a share as repayment of
their personal medical costs that were not reimbursed by Medicaid, a
combined state and federal health insurance program.
In their recent decision, the Appeals Court ruled that federal law
"permits the states to do whatever they like with all amounts
recovered" from the national settlement. That settlement, involving
the major cigarette makers and 46 states, was concluded in 1998 to
resolve a lawsuit filed by the states' attorneys general in 1994.
TRANS WORLD: Faces Consolidated Music Antitrust Suit in Maine Court
-------------------------------------------------------------------
Trans World Entertainment Corporation was named as a defendant along
with five major music distributors and two other specialty retailers in
a consolidated antitrust class action pending in the United States
District Court in Maine.
The first suit was filed in August 2000 by 30 attorneys general in the
United States District Court for the Southern District of New York.
The suit was later amended to add additional states as plaintiffs and
transferred to Maine federal court pursuant to the Multidistrict
Litigation Rules.
The suit alleges that the defendants conspired to violate certain
antitrust laws and to fix prices by requiring retailers to adhere to
minimum advertised prices in order to receive cooperative advertising
funds from the distributors. The suit alleges that consumers were
damaged in an unspecified amount and seeks treble damages and civil
penalties.
Following the service of the first suit, these same defendants were
named as defendants in private class actions, each with similar
allegations as in the prior suits. The suits were later consolidated.
The Company believes that the lawsuits are without merit and that it
will ultimately prevail in this regard. The Company is confident that
the expected outcome of these matters, individually or in the
aggregate, will not have a material adverse effect on its results of
operations and financial condition.
TERRORIST ATTACK: Pres. Bush, Officials Accused of Negligence in Suit
---------------------------------------------------------------------
A San Francisco lawyer filed a class action in the United States
District Court in San Francisco against US President George W. Bush,
for alleged dereliction of duty in failing to stop the September 11
terrorist attacks, the BayInsider reports. The suit, filed on behalf
of all American citizens, also names as defendants:
(1) Vice President Dick Cheney,
(2) Attorney General John Ashcroft,
(3) Defense Secretary Donald Rumsfeld,
(4) National Securitie Advisor Condoleeza Rice,
(5) FBI Director Robert Mueller, and
(6) Transportation Secretary Norman Mineta
Lawyer Stanley G. Hilton, filed the suit, which further alleges that
the defendants failed to carry out their constitutional duties to act
on intelligence information that allegedly showed the threat of
terrorist hijackings. The lawsuit is based on two claims: violation of
citizens' constitutional rights and negligence in the discharge of the
officials' duties. The suit asks for US$7 billion in damages.
Representatives of the US Department of Justice were not immediately
available for comment, the BayInsider reports.
U.S. GYPSUM: Damage Suits Stayed After Parent Files Ch. 11 Bankruptcy
---------------------------------------------------------------------
The personal injury class action filed against United States Gypsum
Corporation in the US District Court in Orange County, Texas has been
stayed after the Company's parent, USG Corporation, voluntarily filed
for Chapter 11 Bankruptcy in the US Bankruptcy Court in Delaware
The suit was filed on behalf of an alleged class comprising the state
of Texas, its public colleges and universities, and all political
subdivisions of the state of Texas. The County of Orange commenced the
suit, which also named other manufacturers of asbestos containing
materials. As to the Company, the putative class also includes all
Texas:
(1) private and/or non-public colleges,
(2) universities,
(3) junior colleges,
(4) community colleges, and
(5) elementary and secondary schools.
The suit seeks recovery of the costs of removing and replacing
asbestos-containing materials in buildings at issue as well as punitive
damages. The complaint does not specify how many buildings are at
issue.
The Company also faces ten other property damage and/or personal injury
cases, all of which have been stayed.
U.S. CUSTOMS: Agents Cite Instances of Racial Discrimination in Bureau
----------------------------------------------------------------------
Hispanic agents of the United States Customs Service revealed their
personal experiences of racial discrimination in the bureau in a press
conference held last Thursday.
The suit alleges that the Customs Service discriminated against
Hispanic special agents since the 1970s in promotions, transfers and
assignments, awards and bonuses, training, and discipline. The
complaint further alleges that the Customs Service maintained a hostile
work environment, retaliated against agents for asserting their equal
employment and opportunity rights and discriminated against them by
denying foreign language pay awards.
The agents related these cases:
(1) Special Agent John Yera, who is partially paralyzed from a
gunshot wound during a botched undercover operation, alleged
the Customs Service failed to provide Spanish language backup
for undercover operations and discrimination in language pay;
(2) Special Agent Jorge Balderram alleged a racist "Mexican Mafia"
was sent to the bureau's commissioner, which caused him to
suffer discrimination;
(3) Special Agent Ramon Martinez said he was labeled an "excitable
Mexican" and an "inferior investigator leading to hostile work
environment and retaliation;
(4) Special Agent Ramon Davila encountered hostile environment and
numerous discriminatory acts to which he was victim;
(5) Retired Special Agent E. William Velasco, one of the highest
ranking Hispanics in Customs and served as the acting
Associate Commissioner of Internal Affairs, discussed the
racist allegations of a "Mexican Mafia" in El Paso, Texas, and
personal discrimination against himself;
This case is the third major discrimination class action against
Treasury law enforcement agencies. The African American agents of the
Bureau of Alcohol, Tobacco and Firearms have pending proceedings to
hold Secretary of Treasury Paul O'Neill in contempt for failure to
comply with a 1996 Consent Decree and the African American Secret
Service agents have a two year suit pending alleging systemic racial
discrimination in that agency.
Counsel for plaintiffs in all three cases sought last Friday to have
all three cases consolidated, alleging a pattern and practice at the
highest levels of the Treasury Department dating back three decades.
For more information, contact David J. Shaffer or Ronald A. Schmidt of
Shaffer, Rapaport & Schmidt LLP by Phone: 202-789-8188 or visit the
firm's Website: http://www.srslaw.co
Securities Fraud
ADELPHIA BUSINESS: Berger & Montague Launches Securities Suit in PA
-------------------------------------------------------------------
Berger & Montague, PC initiated a securities class action against
certain officers and directors of Adelphia Business Solutions, Inc.
(OTC: ABIZQ) in the United States District Court for the Eastern
District of Pennsylvania on behalf of all persons or entities who
purchased Company securities between January 6, 2000 and March 27,
2002, inclusive. The suit names as defendants:
(1) John J. Rigas,
(2) James P. Rigas,
(3) Michael J. Rigas and
(4) Timothy J. Rigas
The Company filed for bankruptcy on March 27, 2002 and is not named as
a defendant in this action.
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 January 6, 2000 and March 27, 2002, thereby artificially
inflating the price of Company securities.
The complaint alleges that, among other things, throughout the class
period, the Company artificially inflated the reported number of
telecommunications lines that it sold and installed deceiving the
marketplace. In addition, the complaint alleges that defendants
improperly caused the Company to pay the overhead expenses of Adelphia
Communications Corporation, a company which owned a majority of the
Company and was controlled by defendants.
Furthermore, the suit alleges that defendants failed to disclose in its
discussions of its own liabilities that the Company had in excess of
$2.3 billion in off-balance sheet liabilities, limiting its ability to
obtain additional funding.
On March 1, 2002, the Company announced that it would default on
interest payments on certain secured notes. Subsequently, on March 27,
2002, defendants disclosed that Adelphia was liable for $2.3 billion of
previously undisclosed debt. On that same day, Adelphia Solutions
filed for bankruptcy.
For more details, contact Sherrie R. Savett, Robin Switzenbaum, Douglas
Risen or Kimberly A. Walker by Mail: 1622 Locust Street, Philadelphia,
PA 19103 by Phone: 888-891-2289 or 215-875-3000 by Fax: 215-875-5715 by
E-mail: InvestorProtect@bm.net or visit the firm's Website:
http://www.bergermontague.com
CMS ENERGY: Shareholders Commence Suit For Securities Act Violations
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Buyers of CMS Energy Corporation securities recently filed a lawsuit
against the Company and some of its executives, The Associated Press
reports. The complaint seeks class action status and was filed in
Detroit federal court by law firm Berger & Montague, PC. Other similar
suits have been filed as well.
The Philadelphia law firm said in a news release that between August 3,
2000 and May 10, 2002, the Dearborn-based Company made false and
misleading statements about its financial status. Last week, the
Company said an internal audit had found that its energy marketing unit
had made round-trip trades totaling $4.4 billion from May 2000 through
mid-January 2002. The Company said it then halted the trades and
decided after the third quarter of 2001 to keep them out of financial
reports.
Company spokesman John Barnett said that "The suits we have seen so
far, and the ones that we expect to see, allege the same grievances and
request the same damages on behalf of the same group of shareholders.We
expect there will probably be other (lawsuits) that will weigh in."
Mr. Barnett said that the Company will defend itself vigorously in
court over any lawsuits filed regarding this trading issue, and he
added, "I think actually as more information gets out about the trading
activity, our shareholders are becoming more comfortable."
After news broke about the round-trip trades, the Company's stock price
fell to below $13 a share from above $24 at the start of the year.
Round-trip trades, which allow a company to artificially inflate its
trading volume, involve selling and then immediately rebuying blocks of
electricity to and from another energy company for the identical price.
dELiA*s INC.: DE Court Approves $6.3M Securities Suit Settlement
----------------------------------------------------------------
The Delaware Chancery Court approved the US$6.3 million settlement
proposed by dELiA*s Inc. to settle a consolidated securities class
action opposing the merger between the Company and iTurf Inc. The suit
names as defendants the two Companies and each of iTurf's directors.
The suit alleges the Company and the members of iTurf's Board of
directors breached their fiduciary duties to iTurf's public
stockholders and that the merger exchange ratio was unfair to
ITurf's public stockholders.
In March 2001, the Company answered the suit, asserted affirmative
defenses and separately moved to strike certain allegations. They also
asked the Court to dismiss the suit.
On January 15, 2002, all parties entered into a stipulation and
agreement of compromise, settlement and release. Pursuant to the
settlement, the defendants will receive full release in exchange for
one million shares of the Company's common stock, which shares were
issued and delivered on April 26, 2002.
The settlement was approved without objection by the court on April 8,
2002 and, provided no appeal is taken, will become a final order in May
2002.
dELiA*s INC.: NY Court Grants Certification To Securities Fraud Suit
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The United States District Court for the Southern District of New York
granted class certification to a consolidated securities class action
pending against clothing company dELiA*s Inc. and certain of its
officers and directors, including one former officer of a subsidiary.
The suit, filed on behalf of the purchasers of the Company's securities
during the period January 20, 1998 through September 10, 1998,
generally alleges that the defendants violated Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder by making
material misstatements and by failing to disclose allegedly material
information regarding trends in our business. The suit also alleges
that the individual defendants are liable for those violations under
Section 20(a) of the Securities Exchange Act.
In April 2000, the defendants asked the Court to dismiss the suit, but
the motion was denied in March 2001.
The Company has answered the suit. In a disclosure to the Securities
and Exchange Commission, the Company stated that it intends to
vigorously defend against this action. While an estimate of the
possible range of loss cannot be made, based upon information presently
known to management, the Company believes that the claim will not have
a material adverse effect on its business.
DOV PHARMACEUTICAL: Mounting Vigorous Defense Against Suits in NY, NJ
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Dov Pharmaceutical, Inc. intends to vigorously oppose several
securities class actions pending in the United States District Courts
for the Southern District of New York and for the District of New
Jersey, against the Company, certain of its officers and directors and
certain of the underwriters in its April 25, 2002 initial public
offering (IPO) of 5,000,000 shares of its common stock.
The suits allege violations of the Securities Act of 1933 based upon
the alleged failure to disclose that the Company filed a revised
registration statement and prospectus for the offering reflecting
changes to the financial statements of its joint venture with Elan
Corporation, PLC, DOV (Bermuda), Ltd. The suits were brought on behalf
of purchasers of the Company's common stock in or traceable to the IPO.
The Company has not been served with a complaint in any of the suits.
While the Company is still evaluating the effect of the lawsuits on its
business, it believes that it has meritorious defenses to the claims
purported to be alleged in the suits. The Company expects that
additional complaints may be filed in the future making similar
allegations.
FREEMARKETS INC.: PA Court Yet To Decide on Securities Suit Dismissal
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The United States District Court in Pittsburgh, Pennsylvania has yet to
decide on the motion filed by Freemarkets, Inc. to dismiss a
consolidated securities class action, charging the Company and two of
its executive officers of federal securities violations.
The suit stems from the Company's announcement on April 23, 2001 that,
as a result of discussions with the staff of the SEC, the Company was
considering amending its 2000 financial statements for the purpose of
reclassifying fees earned by the Company under a service contract with
Visteon.
In addition, in September 2001, an individual claiming to be a Company
shareholder filed a shareholders derivative action, nominally on behalf
of the Company, against all of the Company's directors and certain of
its executive officers. The suit is based on the same facts alleged in
the federal securities suit and has been stayed pending a ruling on
the Company's motion to dismiss the suit.
The Company and the individual defendants believe that the plaintiffs'
allegations are completely without merit and intend to defend these
claims vigorously.
FREEMARKETS INC.: Underwriters' Commissions, Agreements Suits' Subjects
-----------------------------------------------------------------------
Freemarkets, Inc. labeled "without merit" several securities class
actions filed in the United States District Court for the Southern
District of New York alleging violations of federal securities laws
relating to the Company's 1999 initial public offering (IPO).
The complaints allege that underwriters in the IPO received excessive
commissions and entered into unlawful agreements with certain of their
clients pursuant to which those clients purchased the Company's stock
in the after-market for the purpose of artificially inflating the price
of the Company's shares.
In four of the suits, the Company and certain of its officers are named
as defendants, together with the underwriters that are the subject of
the plaintiffs' allegations. Each of these cases has been consolidated
for pretrial purposes into an earlier lawsuit against the underwriters
of the Company's IPO. In addition, the cases have been consolidated
for pretrial purposes with approximately 1,000 other lawsuits filed
against other issuers, their officers, and underwriters of their
initial public offerings.
As of March 31, 2002, an amended consolidated complaint had not been
filed. The Company and the individual defendants intend to defend
against these claims vigorously.
GOLDMAN SACHS: eToys Files Suit Over Role in May 1999 Public Offering
---------------------------------------------------------------------
eToys Inc., now EBC I Inc., (Pink Sheets:ETYSQ) filed a class action
against Goldman Sachs & Co. alleging breaches of contract and fiduciary
duty, fraud and other misconduct relating to Goldman's role as lead
underwriter of eToys' May 20, 1999 initial public offering (IPO).
The lawsuit, filed in the Supreme Court of the State of New York, has
been brought on behalf of EBC I Inc. by The Official Committee of
Unsecured Creditors appointed in the Chapter 11 bankruptcy case.
Stanley Grossman, of New York law firm Pomerantz Haudek Block Grossman
& Gross, co-counsel for the plaintiff, says that eToys incurred,
"hundreds of millions of dollars in damages and eventually had to
declare bankruptcy as a result of Goldman Sachs' illegal conduct in
underpricing the IPO and in receiving kickbacks."
On Goldman Sachs' recommendation, the IPO was priced at $20 per share.
Plaintiff charges that Goldman Sachs knew that a substantially higher
price was warranted given the demand for the stock but intentionally
underpriced the shares because Goldman had entered into unlawful
arrangements with its customers who were obligated to kick back to
Goldman a portion of any profits that they made on after market sales
of eToys securities allocated to them on the IPO.
On the first day of trading, over 13 million shares changed hands, with
prices reaching over $85 per share, or more than four times the IPO
price set by Goldman Sachs. The extraordinary demand for eToys' shares,
and the high price the public was willing to pay for them, continued
for many months after the IPO with approximately 300 million shares
trading at prices as high as $86.
Bill Wachtel of Wachtel & Masyr, co-counsel for plaintiff, said that
eToys had retained Goldman Sachs as lead underwriter and it relied upon
its recommendation to price shares at $20 because of Goldman's vast
experience and its claim for integrity and the highest of business
ethics.
For more details, contact Stanley M. Grossman by Phone: 888-476-6529,
888-4-POMLAW by E-mail: smgrossman@pomlaw.com or visit the firm's Web
site: http://www.pomlaw.com
IRVINE SENSORS: Deems Securities Suits "Without Merit" in S.D. CA
-----------------------------------------------------------------
Irvine Sensors Corporation faces several securities class actions
pending in the United States District Court for the Southern District
of California on behalf of purchasers of Irvine Sensors Corporation
(NASDAQ: IRSN) securities between January 6, 2000 and September 15,
2001, inclusive, against the Company and certain of its officers and
directors.
The suits uniformly allege the defendants issued false statements
regarding the prospects for the EFS-1 product being developed by
Silicon Film Technologies, Inc., a former subsidiary of the Company,
which had the effect of artificially inflating the market price of the
Company's securities. The suit alleges violations of the federal
securities laws.
The Company believes that those lawsuits are without merit and intends
to defend the action vigorously.
KINROSS GOLD: Cohen Milstein Commences Securities Fraud Suit in Nevada
----------------------------------------------------------------------
Cohen, Milstein, Hausfeld & Toll, PLLC launched a securities class
action in the United States District Court for Nevada against:
(1) Kinross Gold Corporation (Amex:KGC),
(2) Kinross Gold, USA Inc.,
(3) Kinam Gold Inc. (Amex:KGC.pb) and
(4) Robert M. Buchan, Chairman & Chief Executive Officer
The suit was filed on behalf of all persons or entities that now hold
Kinam Preferred Stock or who tendered Kinam Preferred Stock in a tender
offer by Kinross USA effected February to March 2002. The suit alleges
that defendants, over an extended time frame and in numerous separate
steps:
(i) breached the terms of the Kinam Preferred Stock;
(ii) breached the fiduciary duties owed by control persons and
major shareholders to other shareholders;
(iii) violated the "best price rule" promulgated under Section 13(e)
of the Securities Exchange Act of 1934;
(iv) violated anti-fraud provisions of rules promulgated under
Sections 10(b), 13(e) and 14(c) of the Exchange Act;
(v) violated the anti-racketeering law set forth in Section 207 of
the Nevada Revised Statutes;
(vi) committed common law fraud; and
(vii) violated New York Stock Exchange Rule 311.03.
Since the 1998 merger, pursuant to which Kinross acquired control of
Kinam, as alleged in the complaint, Kinross has consistently and
repeatedly acted to impair the value of Kinam Preferred Stock in order
to facilitate a subsequent purchase at an unfair price, culminating in
the coercive and illegal tender offer of February to March 2002.
For more details, contact Andrew N. Friedman or Mary Ann Fink by Mail:
1100 New York Avenue, NW, West Tower, Suite 500, Washington, DC 20005
by Phone: 888-240-0775 or 202-408-4600 by E-mail: afriedman@cmht.com or
mfink@cmht.com or visit the firm's Web site: http://www.cmht.com
MERRILL LYNCH: Kaplan Fox Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------
Kaplan Fox & Kilsheimer initiated a securities class action against
Merrill Lynch & Co., Inc., and Internet stock analyst and First Vice
President of Merrill Lynch, Henry Blodget, in the United States
District Court for the Southern District of New York on behalf of all
persons or entities who purchased or otherwise acquired the common
stock of GoTo, Inc., Inc. (Nasdaq: OVER) between January 11, 2001 and
June 6, 2001, inclusive.
The complaint alleges that defendants violated the federal securities
laws by issuing analyst reports regarding GoTo that recommended the
purchase of GoTo common stock and which set price targets for GoTo
common stock, which were materially false and misleading and lacked any
reasonable factual basis.
The complaint further alleges that, when issuing their GoTo analyst
reports, the defendants failed to disclose significant, material
conflicts of interest, which resulted from their use of Mr. Blodget's
reputation and his ability to issue favorable analyst reports, to
obtain investment banking business for Merrill Lynch.
Furthermore, in issuing their GoTo analyst reports, in which they
recommended the purchase of GoTo stock, the Defendants failed to
disclose material, non-public, adverse information which they possessed
about GoTo.
Throughout the class period, the defendants maintained positive
recommendations on GoTo in order to obtain and support lucrative
financial deals for Merrill Lynch. As a result of defendants' false
and misleading analyst reports, GoTo's common stock traded at
artificially inflated levels during the class period.
For more detiails, contact Frederic S. Fox by Mail: 805 Third Avenue,
22nd Floor, New York, NY 10022 by Phone: 800-290-1952 by E-mail:
mail@kaplanfox.com or visit the firm's Web site:
http://www.kaplanfox.com
MERRILL LYNCH: Schiffrin & Barroway Commences Securities Suit in NY
-------------------------------------------------------------------
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 Merrill Lynch Internet
Strategies Fund from March 14, 2000 through October 15, 2001,
inclusive.
The suit charges Merrill Lynch & Co. and others with issuing false and
misleading statements concerning its recommendations of shares of
Internet companies in the Fund. Furthermore, when issuing shares of
the Fund and their Internet Company reports, the defendants failed to
disclose significant, material conflicts of interest which they had, in
light of their use of defendant Henry Blodget's reputation and his
Internet companies' analyst reports, to obtain investment banking
business for Merrill Lynch.
Furthermore, in issuing shares of the Fund and their Internet company
reports, in which they were recommending the purchase of stock in
Internet companies, the defendants failed to disclose material, non-
public, adverse information which they possessed about Internet
companies in the Fund as well as their true opinion about Internet
companies in the Fund.
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 Website: http://www.sbclasslaw.com
PRE-PAID LEGAL: OK Judge Won't Reconsider Securities Suit Dismissal
-------------------------------------------------------------------
Robin J. Cauthron, chief judge of the federal court in Oklahoma City,
has denied a motion to reconsider the dismissal of a securities class
action against Pre-Paid Legal Services Inc., Associated Press Newswires
reports. The lawsuit was dismissed with prejudice, meaning the same
case cannot be filed again.
The lawsuit accused the Company of misleading investors by using
accounting practices that inflated its earnings. The Company has since
adopted more conservative accounting methods after losing several
battles with the Securities and Exchange Commission.
Judge Cauthron, in denying the motion to reconsider, said that even
with restated earnings, the Company remained profitable.
The Company still faces lawsuits in other states, alleging that it
oversells its product to customers who often believe they will receive
far more legal coverage than they do. The Company sells legal plans,
covering services such as will preparation and traffic violation
defense, and claims more than 1.2 million customers.
PEDIATRIC SERVICES: GA Court Grants Approval To $3.2M Suit Settlement
---------------------------------------------------------------------
The United States District Court for the Northern District of Georgia
approved a US$3.2 million settlement proposed by the Pediatric Services
of America, Inc. to settle a consolidated amended securities class
action against the Company and certain of its then current officers and
directors.
In general, the plaintiffs alleged that prior to the decline in the
price of the Company's Common Stock on July 28, 1998, there were
violations of the federal securities laws arising from misstatements of
material information in and/or omissions of material information from
certain of the Company's securities filings and other public
disclosures principally related to its reporting of accounts receivable
and the allowance for doubtful accounts. The suit was filed on behalf
of all persons who purchased the Company's Common Stock during the
period from July 29, 1997 through and including July 29, 1998.
In October 1999, the Company and the individuals named as defendants
moved to dismiss the amended complaint on both substantive and
procedural grounds, but the court denied the motion. In February 2001,
the court certified the suit as a class. Fact discovery in the case
closed on July 31, 2001.
In September 2001, the plaintiffs moved for leave to file a second
amended complaint and to expand the class period to include all persons
who purchased the Company's stock between November 11, 1996 and July
28, 1998. The court denied the plaintiffs' motion on October 12, 2001.
In January 2002, the parties entered into a stipulation of settlement
resolving all claims asserted in the lawsuit against all parties for a
total of $3.2 million, subject to court approval. On March 14, 2002,
following a hearing on the fairness, reasonableness and adequacy of the
proposed settlement, the court entered an order approving the
settlement. The time for appeal of the settlement order has expired and
no appeal has been taken.
PEREGRINE SYSTEMS: Leo Desmond Commences Securities Suit in S.D. CA
-------------------------------------------------------------------
The Law Offices of Leo W. Desmond initiated a securities class action
on behalf of shareholders who acquired Peregrine Systems, Inc.
(Nasdaq:PRGN) securities between July 20, 2000 and May 3, 2002,
inclusive, in the United States District Court for the Southern
District of California against the Company, Stephen P. Gardner and
Matthew C. Gless.
It is alleged that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market throughout the class period which statements
had the effect of artificially inflating the market price of the
Company's securities.
For more information, contact Leo W. Desmond by Phone: 888-337-6663,
561-712-8000 by E-Mail: Info@SecuritiesAttorney.com or visit the firm's
Website: http://www.SecuritiesAttorney.com
RESOURCES ACCRUED: Court Rejects Settlement, Sets New Fairness Hearing
----------------------------------------------------------------------
The Delaware Chancery Court refused to grant approval to a US$9 million
settlement proposed by the Resources Accrued Mortgage Investors 2, LP
to settle a class action in connection with the March 1999 sale of the
Harborista Loan and the marketing of Harbor Plaza, which secured the
Harborista Loan.
The suit alleged purported breaches of fiduciary duties and breaches of
the Company's partnership agreement against the Company (as nominal
defendant) and:
(1) RAM Funding, Inc.,
(2) Presidio AGP Corporation,
(3) NorthStar Capital Investment Corporation and
(4) Charbird Enterprises LLP
In addition, the suit alleges breaches of fiduciary duty in connection
with the purported failure of the Partnership to distribute cash and
the purported failure of the Partnership to enforce the provisions of a
$6,500,000 first mortgage loan to High Cash Partners, LP, better known
as the "Sierra Loan."
On January 22, 2002, the parties entered into a settlement agreement
that
(i) provides for a $9,000,000 payment by the defendants to the
Partnership; and
(ii) requires that the Partnership distribute to its partners the
$9,000,000 payment, less fees and expenses awarded by the
court to plaintiff's counsel (which amount is not expected to
exceed approximately 20% of the settlement amount).
The hearing on the approval of the settlement agreement was held on
April 15, 2002. Due to objections to the proposed settlement, the
court rejected approval for the settlement and a decision was postponed
to a later date. A further hearing with respect to the settlement
is scheduled for June 4, 2002.
The Company cannot give any assurance that the settlement will be
consummated on the terms currently contemplated or that the settlement
will be consummated at all.
SALOMON SMITH: Adopting Changes in Stock Analyst Compensation Schemes
---------------------------------------------------------------------
Investment firm Salomon Smith Barney decided to change compensation for
its stock analyst, after Merrill Lynch & Co. settled New York Attorney
General's charges that its stock analysts misled investors, Associated
Press reports.
Merrill Lynch had recently come under fire after an investigation by
New York Attorney General Eliot Spitzer revealed that its analysts
touted shares in companies so the firm would win highly profitable
investment banking business from the same companies. A string of
revelatory e-mails, and several class actions later, Merrill Lynch
agreed to settle the charges by paying a US$100 million fine and by
adopting compensation ground rules for its analysts.
Last month, Attorney General Spitzer issued a subpoena seeking
documents from Salomon related to its telecommunications analyst Jack
Grubman, a source familiar with the matter told AP. The request covers
communications between the Company's investment banking group and Mr.
Grubman's research team.
In a memo sent to Salomon employees Wednesday, Chairman and Chief
Executive Mike Carpenter, said the settlement sets "a new industry
standard necessary to maintain investor confidence and provide a useful
template for the rest of the industry to follow." He added, the
Company "will separate completely the evaluation and compensation of
equity research analysts from investment banking consistent with the
guidance in the agreement."
Attorney General Spitzer had encouraged Merrill Lynch's rivals to adopt
the settlement as well, saying they were being monitored, according to
an AP report. A Salomon spokeswoman said the Company did not plan to
disclose details Wednesday about the decision, which affects 350
analysts.
Attorney General Spitzer's spokesman Darren Dopp told AP the move "does
show the reforms at Merrill can be duplicated." He said the
investigation of Wall Street brokerages continues, but added that firms
that accept the terms reached with Merrill Lynch will gain a
"competitive advantage." He adds, "The firm that fails to accept these
reforms will be suspect."
SEITEL INC.: Wolf Haldenstein Initiates Securities Suit in S.D. TX
------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the Southern District of
Texas, on behalf of purchasers of the common stock of Seitel, Inc.
(NYSE: SEI) between July 13, 2000 and April 1, 2002, inclusive, against
the Company and certain of its officers and directors.
The complaint 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 charges
that the Company and certain of its senior officers improperly
recognized revenue and net income during fiscal years 2000 and 2001 by
recording revenue on data licensing contracts, prior to specific data
being selected by and delivered to its customers.
The complaint further alleges that top insiders profited illegally from
insider trading in the Company's common stock and earned exorbitant
commissions and bonuses that were tied to reported revenue and
earnings. During the class period and as a result of defendants'
misrepresentations, shares of the Company's common stock traded as high
as $23.03 per share. The Company currently trades, after having
restated its false financial statements, at approximately $8.00 per
share.
On May 3, 2002, the Company issued a press release acknowledging that
the financial statements it issued during the class period were not
prepared in conformity with generally accepted accounting principles
(GAAP). The Company also acknowledged that the May 3, 2002 disclosures
were a result of its conversations with the SEC.
For more details, contact Fred Taylor Isquith, Gregory Nespole, Gustavo
Bruckner, Michael Miske, George Peters, or Derek Behnke by Mail: 270
Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-
mail: classmember@whafh.com or visit the firm's Website:
http://www.whafh.com. All e-mail correspondence should make reference
to Seitel, Inc.
SEITEL INC.: Leo Desmond Commences Securities Fraud Suit in S.D. TX
-------------------------------------------------------------------
The Law Offices of Leo W. Desmond initiated a securities class action
on behalf of shareholders who acquired Seitel, Inc. (NYSE:SEI)
securities between July 13, 2000 and April 1, 2002, inclusive, in the
United States District Court for the Southern District of Texas against
the Company and:
(1) Herbert M. Pearlman,
(2) Paul A. Frame,
(3) Debra D. Valice and
(4) Russell J. Hoffman
It is alleged that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10(b)(5) promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market throughout the class period which statements
had the effect of artificially inflating the market price of the
Company's securities.
For more details, contact Leo W. Desmond by Phone: 888-337-6663, 561-
712-8000 by E-Mail: Info@SecuritiesAttorney.com or visit the firm's
Website: http://www.SecuritiesAttorney.com
UNIVERSAL ACCESS: Wolf Haldenstein Commences Securities Suit in N.D. IL
-----------------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class
action in the United States District Court for the Northern District of
Illinois, on behalf of purchasers of the common stock of Universal
Access, Inc. or Universal Access Global Holdings, Inc. [Nasdaq: UAXS]
between May 10, 2001 and April 24, 2002, inclusive, against the Company
and certain of its officers.
The complaint alleges that defendants violated the federal securities
laws by issuing materially false and misleading statements throughout
the class period that had the effect of artificially inflating the
market price of the Company's securities.
Near the end of 2000, the Company's demand for its reseller services
declined, as well as its ability to achieve revenue and profit targets.
The defendants created a new business plan called CORE. On May 10,
2001, the Company released a press release announcing the CORE
initiative as being successful. The complaint alleges that the
statements made were materially false and misleading.
The complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and misleading
statements to the market during the class period.
The complaint alleges that defendants neglected to properly reveal the
Company's creation of the CORE business model, which put the Company at
attendant and material risks. The complaint further alleges that the
Company knowingly misled the investing public by emphasizing the
continuing strength of its balance sheet while the Company had hired an
investment bank to raise additional capital despite the fact that the
May 10, 2001 press release stated they had no plans for any offerings.
For more details, contact Fred T. Isquith, Gustavo Bruckner, Michael
Miske, George Peters, Derek Behnke by Mail: 270 Madison Avenue, New
York, New York 10016 by Phone: 800-575-0735 by E-mail:
classmember@whafh.com or visit the firm's Website:
http://www.whafh.com. All e-mail correspondence should make reference
to Universal Access.
VERISIGN INC.: Marc Henzel Commences Securities Fraud Suit in N.D. CA
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Northern District of
California on behalf of purchasers of VeriSign Inc. (Nasdaq: VRSN)
common stock during the period between Jan. 25, 2001 and April 25,
2002.
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. The Company
provides digital trust services that enable Web site owners,
enterprises, communications service providers, e-commerce service
providers and individuals to engage in secure digital commerce and
communications.
The complaint alleges that during the class period, defendants sought
to artificially increase the Company's revenue and margins and to
create the perception that its deferred revenue growth was derived
organically. In fact, approximately 10% of the Company's revenue was
derived from sales to small companies in which the Company had invested
and from dubious "barter transactions."
The Company's revenues and earnings derived from related parties were
dubious at best. Specifically, whenever a two-way set of transactions
occurs in which a Company acts as both the lender and service provider,
an investor lacks assurance as to whether the related parties would
have made similar decisions regarding purchases in the absence of
financing from that company.
Accordingly, despite the Company's claims that such transactions were
separately negotiated and recorded at terms the Company considered to
be at arm's length and fair value, the revenue and earnings that the
Company recognized from its relationship with these customers was not
an accurate measure of the "real" demand for the Company's products.
Equally dubious was the quality of the non-monetary portion of revenue
recorded from reciprocal agreements.
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 sell at least $26 million worth
of their own stock and use Company shares to acquire companies in
stock- for-stock transactions.
In order to overstate revenues and assets, the Company violated
generally accepted accounting principles and SEC rules by, among other
things, engaging in improper barter transactions and affiliate sales.
These transactions had the effect of dramatically overstating the
Company's margins and financial statements. On the Company's partial
disclosures on April 25, 2002, the Company's shares plummeted by more
than 50%.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave,
Suite 202 Bala Cynwyd, PA 19004-2808 by Phone: 888-643-6735 or
610-660-8000 by Fax: 610-660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
VIROPHARMA INC.: The Emerson Firm Launches Securities Fraud Suit in PA
----------------------------------------------------------------------
The Emerson Firm initiated a securities class action in the United
States District Court for the Eastern District of Pennsylvania on
behalf of purchasers of ViroPharma, Inc. (Nasdaq:VPHM) publicly traded
securities during the period between July 13, 1999 and March 19, 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 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 complaint, 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, its
shares 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 Tanya Autry by Mail: P.O. Box 25336, Little
Rock, AR 72221-5336 by Phone: 800-663-9817 or by E-mail:
tanya.autry@worldnet.att.net
*********
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
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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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