/raid1/www/Hosts/bankrupt/CAR_Public/020905.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, September 5, 2002, Vol. 4, No. 176
Headlines
AUDIBLE INC.: Asks NY Court To Dismiss Securities Violations Suit
AUSTRALIA: Government To Offer Displaced Seal Rocks Employees Jobs
BLUE MARTINI: Asks NY Court To Dismiss Consolidated Securities Suit
CONTINENTAL ALUMINUM: Residents Sue Over Health-Damaging Pollution
CROSS MEDIA: Shareholders Commence Securities Fraud Suits in S.D. NY
EMPYREAN BIOSCIENCES: Faces Suit For Securities Violations in N.D. OH
GENTEK INC.: PA Court Refuses Certification To Personal Injury Suit
GENTEK INC.: Faces Suit Over Release of Sulfur Chemicals from CA Plant
IDAHO: State Judge Imposes Restrictions on Idaho Grass Farmers
INFOSPACE INC.: Asks WA Court To Dismiss Consolidated Securities Suit
INFOSPACE INC.: WA Court Sets For Oct 2002 Hearing in Derivative Suit
LOOKSMART LTD.: Asks CA Court To Dismiss False Advertising Lawsuit
MITSUBISHI PHARMA: Stock Hits Low After News Of Hepatitis-C Suit
PHILADELPHIA: Lawsuit Considered Due to Impending Property Tax Hike
PRICELINE.COM: CT Court Issues Orders For Pretrial Proceedings in Suit
PRICELINE.COM: Oral Arguments For Dismissal Held, But Court Yet To Rule
PRICELINE.COM: Asks NY Court To Dismiss Suit For Securities Violations
RAZORFISH INC.: Asks NY Court To Dismiss Suit For Securities Violations
SEQUENOM INC.: Asks NY Court To Dismiss Securities Violations Suit
TENFOLD CORPORATION: Signs MOU To Settle Consolidated Securities Suit
TEXAS: Consumers Get Partial Win On Warranties, Right To Safe House
TREX COMPANY: Securities Suit Dismissed For Failure To State Claim
New Securities Fraud Suits
CONSECO INC.: Kwasi Asiedu Commences Securities Fraud Suit in S.D. IN
DUANE READE: Abbey Gardy Commences Securities Fraud Suit in S.D. NY
ECLIPSYS CORPORATION: Weiss & Yourman Lodges Securities Suit in S.D. FL
FIRST HORIZON: Cauley Geller Commences Securities Fraud Suit in N.D. GA
GOLDMAN SACHS: Beatie and Osborn Commences Securities Fraud Suit in NY
INTERPUBLIC GROUP: Weiss & Yourman Lodges Securities Suit in S.D. NY
INTERPUBLIC GROUP: Abbey Gardy Commences Securities Suit in FL Court
MERRILL LYNCH: Beatie and Osborn Commences Securities Fraud Suit in NY
MERRILL LYNCH: Beatie and Osborn Commences Securities Fraud Suit in NY
MERRILL LYNCH: Beatie and Osborn Lodges Securities Fraud Suit in NY
MORGAN STANLEY: Schiffrin & Barroway Lodges Securities Suit in S.D. NY
SALOMON SMITH: Klayman & Toskes Commences Probe For Nortel Employees
SALOMON SMITH: Schiffrin Barroway Lodges Securities Suit in S.D. NY
SALOMON SMITH: Cauley Geller Commences Securities Fraud Suit in S.D. NY
SALOMON SMITH: Beatie and Osborn Commences Securities Fraud Suit in NY
SALOMON SMITH: Beatie and Osborn Commences Securities Fraud Suit in NY
SALOMON SMITH: Klayman & Toskes Files Suit For Worldcom ESOP Members
VIVENDI UNIVERSAL: Berger & Montague Files Amended NY Securities Suit
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AUDIBLE INC.: Asks NY Court To Dismiss Securities Violations Suit
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Audible, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
actions pending against it, certain of its officers, directors and
former directors, and the investment banking firms that were involved
in the Company's 1999 initial public offering (IPO).
The suit alleges that the underwriter defendants allegedly allocated
the opportunity to participate in the IPO by requiring their customers
to pay "kickbacks" in excess of the normal commissions and to make
subsequent purchases in the after market at prices in excess of the IPO
price.
Allegedly, the amounts of the "kickbacks" were sometimes calculated
as a percentage of the customer's paper profits over some specified
period of time after the IPO. It is alleged that these practices were
not disclosed in the registration statement and prospectus for the IPO
and that, as a result, the defendants violated various provisions of
the federal securities laws.
Certain of the complaints purport to set forth claims on behalf of
persons who acquired the Company's common stock from July 16, 1999 to
September 11, 2001. One other complaint purports to represent a class
of persons who acquired the Company's common stock between July 16,
1999 and December 6, 2000.
The cases have been consolidated and have been assigned to the same
judge who is handling virtually identical cases filed against hundreds
of other companies that completed initial public offerings between 1998
and 2000. The Company and the individual defendants have been given an
indefinite extension of time to respond to the complaints while the
plaintiffs focus on pursuing their claims against the underwriters.
The Company believes that the claims against it have no merit and, more
specifically, contends that it and the individual defendants were not
aware of the alleged practices, if they occurred.
In July 2002, the Company and certain of its officers, directors and
former directors, as well as the investment banking firms involved in
the Company's 1999 initial public offering moved to dismiss the
litigation. Regardless of the ultimate outcome of the motions, the
Company intends to vigorously defend itself and the individual
defendants.
AUSTRALIA: Government To Offer Displaced Seal Rocks Employees Jobs
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Employees of the Phillip Island Seal Rocks Sea Life Center plan to take
legal action against the Victorian government after they were told they
would have to reapply for their jobs, The Age reports. However, as
more recent events indicate, the prospects over their jobs may be more
hopeful than they seemed at last glance.
The tourist center's former managing director, Ken Armstrong, told the
Age that about 12 of the staff of 37 persons would mount a class action
against the government, claiming breach of contract. Mr. Armstrong
said that Environment Minister Sherryl Garbutt promised staff last
month that they would keep their jobs when the government took control
of the center.
However, Mr. Armstrong said, the staff has since been told by the
government-appointed chief executive of the center, Frank King, that
any job vacancies would be advertised and that they would need to
apply.
"I believe that 12 or so will meet with lawyers to launch a class
action against the government . there will probably be more involved by
then," said Mr. Armstrong.
The center was closed after a mini-tornado caused $200,000 damage to
its roof just days before the center was handed back to the government
on August 20. The threat of legal action by staff follows the
government's decision to mount a Supreme Court challenge, in an attempt
to avoid paying about $60 million in compensation to Seal Rocks' former
operators.
Independent arbitrator Roger Gillard, QC, last month ordered the
government to pay compensation to the operators after he found the
government had breached its contract with the center, and gave it the
option to rescind control of the facility.
Premier Steve Bracks defended the government's decision to challenge
Mr. Gillard's findings, despite saying two years ago that the
government would abide by the arbitrator's decision. "I originally
said that we should abide by the arbitrator's decision, but I was in
receipt of advice recently, of legal opinions, which showed there were
manifest errors in law, which should be tested through an appeal," Mr.
Bracks said.
While the government pursues further legal action, Mr. Armstrong spoke
out strongly to the public, saying the center's operators would have
been eligible for $41 million compensation to cover capital investment
and interest, plus $5 million for legal fees. Mr. Armstrong's
criticisms were couched in strong language.
However, out of all this rancor came new word about the staff's jobs.
A government spokeswoman said that Mr. Armstrong had fired the staff
before handing control of Seal Rocks to the government. This state of
things made it impossible for the government to keep everybody in
employmnet. She said that although the staff would have to apply for
jobs, they would all be offered employment when the center reopens
later this year.
BLUE MARTINI: Asks NY Court To Dismiss Consolidated Securities Suit
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Blue Martini Software, Inc. asked the United States District Court for
the Southern District of New York to dismiss the securities class
actions pending against the Company, certain of its officers and
directors, and the underwriters of its initial public offering (IPO).
The suit alleges the defendants violated the federal securities laws
because the Company's IPO registration statement and prospectus
allegedly contained untrue statements of material fact or omitted
material facts regarding the compensation to be received by, and the
stock allocation practices of, the IPO underwriters.
Similar complaints were filed in the same Court against hundreds of
other public companies that conducted IPOs of their common stock since
the mid-1990s. In August 2001, all of these IPO-related lawsuits were
consolidated for pretrial purposes before United States Judge Shira
Scheindlin of the Southern District of New York.
Judge Scheindlin held an initial case management conference on
September 7, 2001, at which time she ordered, among other things, that
the time for all defendants in the IPO lawsuits to respond to any
complaint be postponed until further order of the court. Thus, the
Company has not been required to answer any of the complaints, and no
discovery has been served on the Company.
Defendants later filed a global motion to dismiss the IPO Lawsuits on
July 15, 2002, as to which the court does not expect to issue a
decision until at least November 2002. The Company believes that this
lawsuit is without merit and intends to defend against it vigorously.
The Company believes that the ultimate outcome of this lawsuit will not
have a material adverse effect on its financial position and results of
operations.
CONTINENTAL ALUMINUM: Residents Sue Over Health-Damaging Pollution
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More than 150 residents of Lyon Township, Michigan, have sued
Continental Aluminum recycling plant in a class action, citing the
health-damaging air pollution released by the Milford Road plant on the
southern edge of New Hudson, an unincorporated settlement, reports The
Detroit News. A judge has placed a gag order on the parties.
State health specialists this fall will investigate allegations that
emissions from the plant have triggered health problems in the
neighborhood. "It seems the health effects are due to what might be in
the air," said Christina Bush, toxicologist with the Michigan
Department of Community Health. ".(at this time) there is not enough
information to definitively say yes it is or no it isn't."
Federal and state toxicologists toured the plant in March and met with
neighbors in response to a petition sent a month earlier to the US
Agency for Toxic Substances and Disease Registry. The federal agency
and the state health department will conduct the investigation.
Residents say the foundry, which recycles aluminum scrap, emits odors,
smoke and noise that they connect to nausea, headaches and
sleeplessness. Results of the March tests will be released next week
and distributed to residents at the township hall, Ms. Bush said.
The Air Quality Division of the Department of Environmental Quality has
cited the company for pollution violations six times since the company
relocated to the township in 1998. A Detroit news investigation in
2001, found that Continental relocated from Detroit after concealing
its pollution record in Wayne County. The investigation revealed that
the company failed to inform Lyon Township officials about a $50,000
settlement paid to Wayne County for air pollution problems.
CROSS MEDIA: Shareholders Commence Securities Fraud Suits in S.D. NY
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Cross Media Marketing Corporation faces three securities class actions
pending in the United States District Court for the Southern District
of New York against it and officer Ronald Altback, on behalf of classes
of persons who purchased the Company's shares from November 5, 2001
through July 11, 2002.
The complaints generally allege that the Company and Mr. Altback
violated Sections 10(b) and 20(a) of the Securities and Exchange Act of
1934, and Rule 10b-5, by issuing a series of materially false and
misleading statements to the market during the class period, including
press releases during the class period that allegedly overstated the
Company's business prospects and allegedly mischaracterized the status
of the FTC proceedings brought against the Company and others.
The Company and Mr. Altback dispute these claims and intend to
vigorously defend this matter. Because these lawsuits are still in the
early stages, the Company is unable to predict the outcome or the
effect they may have on its operating results, financial condition or
stock price.
EMPYREAN BIOSCIENCES: Faces Suit For Securities Violations in N.D. OH
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Empyrean Bioscience, Inc. and its current and former directors and
officers face a securities class action pending on behalf of
shareholders who acquired the Company's securities between July 30,
1999 through December 7, 2001, inclusive, in the United States District
Court for the Northern District of Ohio.
The action charges that defendants violated federal securities laws 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.
The Company labels the suit without merit and intends to vigorously
defend against it.
GENTEK INC.: PA Court Refuses Certification To Personal Injury Suit
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The Court of Common Pleas, Delaware County, Pennsylvania refused to
certify as a class action the suit filed against Gentek, Inc., on
behalf of more than 1,000 current and former employees of the Sunoco
Marcus Hook, Pennsylvania refinery located immediately adjacent to the
Company's Delaware Valley facility.
The complaint alleges that unspecified releases of sulfur dioxide and
sulfur trioxide over unspecified timeframes caused injuries to the
plaintiffs, and seeks, among other things, to establish a "trust fund"
for medical monitoring for the plaintiffs.
In May 2002, the trial court denied plaintiffs' motion to certify the
case to proceed as a class action, and the plaintiffs have appealed
that decision.
The Company believes this claim is without merit and will vigorously
defend itself in this matter. Management further believes that the
Company's current accruals and available insurance should provide
adequate coverage in the event of an adverse result in this matter, and
that, based on currently available information, this matter will not
have a material adverse effect on the Company's results of operations
or financial condition.
GENTEK INC.: Faces Suit Over Release of Sulfur Chemicals from CA Plant
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Gentek, Inc. faces several lawsuits, including a class action, filed by
lawyers claiming to represent approximately 18,000 persons filed
approximately 18 lawsuits in Contra Costa, San Francisco and Alameda
counties in California state court, making claims against the Company
and a third party.
The suit arose out of a May 1, 2001 release of sulfur dioxide and
sulfur trioxide from the Company's Richmond, California sulfuric acid
facility. The release was caused when the third party's truck hit a
power pole and damaged an electrical substation owned by the local
utility, thereby knocking out electrical power to a number of users,
including the Company. This resulted in a loss of vacuum pressure at
the Company's facility, which led to the release.
The Company, which has also filed suit against the third party in
California State Court in Contra Costa County in connection with the
May 1, 2001 incident, has been served with some of the lawsuits. The
lawsuits claim various damages for alleged injuries, including, without
limitation, claims for:
(1) personal injury,
(2) emotional distress,
(3) medical monitoring,
(4) nuisance,
(5) loss of consortium and
(6) punitive damages
The Company has filed a petition for coordination asking that all of
the lawsuits be coordinated before a single judge. That petition is
pending.
The Company will vigorously defend itself against these suits. The
Company believes it has sufficient insurance coverage in the event of
an adverse result in these lawsuits and does not believe that this
matter will have a material adverse effect on its financial condition
or results of operations.
IDAHO: State Judge Imposes Restrictions on Idaho Grass Farmers
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Idaho State court levied tough restrictions on grass burning as a
lawsuit brought by a group of Idaho residents moves through the court
system. The order includes all grass farmers in Idaho, and will stay
in effect until Dec. 31, 2002 or until a decision is reached on the
lawsuit.
In the order, Judge John Mitchell stated, "The farmers know the smoke
from burning their grass fields has a negative health effect on at
least certain people." Judge Mitchell also stated in the order that
"when you balance simple economics issues on one side of the scale,
with health and life issues on the other side of the scale, it is easy
to see where the scales of justice will tip."
"We are very pleased that Judge Mitchell agreed with our clients," said
Steve Berman, a Seattle attorney representing the Idaho residents.
"But while this is a step in the right direction, it is just the first
step. We look forward to moving ahead with the suit and proving our
claims in court."
In an effort to protect Idaho citizens who are severely affected by the
grass burning, Judge Mitchell ordered that every farmer must bale all
loose straw and other residue from the ground before the fields can be
burned. Grass burning can only commence once a smoke management
coordinator or a local smoke coordinator certifies that material has
been removed.
The order also requires the defendants in the lawsuit, 79 Idaho grass
farmers, to post a $100,000 bond to cover possible healthcare costs and
moving expenses for the plaintiffs in the suit.
In addition to a complete ban on field burning, the lawsuit asks the
court for a medical monitoring program for those affected by the smoke,
as well as monetary damages. If approved, the proposed class action
would include residents with medical conditions aggravated by the smoke
in Kootenai, Bonner, Benewah and Spokane Counties, as well as other
areas.
Filed against the state of Idaho and 79 grass farmers and seed
companies, the lawsuit claims that the smoke produced by annual grass
fires used by farmers to clear fields causes serious health risks,
especially to those with respiratory conditions including asthma and
cystic fibrosis.
The suit cites a number of cases in which the smoke causes dramatic
health effects, including the case of Alex H., a 10-year-old girl
suffering from cystic fibrosis. According to the suit, Alex cannot
tolerate even a minimal level of smoke pollution and according to
medical experts, she suffers life-shortening pulmonary injury each time
she breathes smoke from the burning fields.
"For all the plaintiffs suffocating from the field burns, the Judge's
order is nothing short of a deep breath of fresh air in what had become
a stagnant situation," Mr. Berman said. "For the first time, many of
these folks will have the opportunity to live in their own homes during
the burn months."
According to the suit, the Idaho Department of Environmental Quality
received more than 1,700 complaints during August and September of
2001. Experts have noted that exposure to even minimal levels of
pollutants results in increased numbers of emergency room visits and
hospitalizations, increased doctor visits, increased school and work
absences, and decreased physical activities for individuals afflicted
with cystic fibrosis, chronic heart disease or inflammatory airwave
diseases, according to the complaint.
Seeking to protect those most affected by the grass burning pollutants,
the suit represents individuals with cystic fibrosis, chronic heart
disease or a medically diagnosed inflammatory airwave disease such as
asthma or chronic bronchitis who live in Kootenai, Bonner, Benewah and
Spokane Counties, as well as other areas.
For more details, contact Brent Walton of Hagens Berman by Phone:
206-623-7292 by E-mail: brent@hagens-berman.com or visit the firm's
Website: http://www.hagens-berman.com
INFOSPACE INC.: Asks WA Court To Dismiss Consolidated Securities Suit
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Infospace, Inc. asked the United States District Court for the Western
District of Washington to dismiss a consolidated securities class
action pending against it, its chief executive officer, its chief
financial officer and Merrill Lynch & Co. Merrill Lynch has also asked
for the transfer of the suit to the United States District Court for
the Southern District of New York.
The consolidated suit alleges that the Company and its chief executive
officer made false and misleading statements about the Company's
business and prospects during the period between January 26, 2000 and
January 30, 2001. The complaint alleges violations of the federal
securities laws and does not specify the amount of damages sought.
In April 2002, the Company filed a motion to dismiss the complaint for
failure to state a claim. The plaintiffs later filed a motion for
leave of the court to amend the consolidated complaint to add Merrill
Lynch and one of its analysts as defendants, which was granted on April
30, 2002. The amended complaint was filed on May 9, 2002.
On July 2, 2002, the Company filed a new motion to dismiss the amended
complaint for failure to state a claim. The Company has also opposed
the transfer motion and, with Merrill Lynch's support, seek severance
and transfer of only plaintiff's claims against Merrill Lynch to New
York. Plaintiffs have sought to stay the case pending resolution of
the transfer and severance motion.
The Company believes it has meritorious defenses to plaintiffs' claims
against the Company and its management, but litigation is inherently
uncertain and the Company may not prevail in this matter.
INFOSPACE INC.: WA Court Sets For Oct 2002 Hearing in Derivative Suit
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The Superior Court of Washington for King County has set for October
2002 the hearing on the motion to terminate a shareholder derivative
complaint against certain current and former officers and directors of
Infospace, Inc.
The complaint alleges that certain defendants breached their fiduciary
duties to the Company and were unjustly enriched by engaging in insider
trading, and also alleges that certain defendants breached their
fiduciary duties in connection with the Go2Net and Prio mergers and
that one defendant converted the Company's assets to his personal use.
The Company has entered into indemnification agreements in the ordinary
course of business with officers and directors and may be obligated
throughout the pendency of this action to advance payment of legal fees
and costs incurred by the defendant officers and directors pursuant to
the Company's obligations under the indemnification agreements and
applicable Delaware law.
The special litigation committee of the Company's Board of Directors,
with the assistance of independent legal counsel, has investigated the
complaint, and on March 22, 2002 filed a motion to terminate this
derivative action. Discovery is proceeding with respect to the motion
to terminate and a hearing on the motion is scheduled for early October
2002.
LOOKSMART LTD.: Asks CA Court To Dismiss False Advertising Lawsuit
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Looksmart Ltd. asked the Superior Court in San Francisco County to
dismiss the class actions filed against them in relation to the launch
of the Company's new Small Business Listings product in April 2002.
The first suit was commenced in May 2002 by Legal Staffing Partners,
Inc., an express listing customer. The complaint alleges breach of
contract, unfair business practices and false advertising. On July 9,
2002, Curt Kramer, an express listing customer, filed another similar
lawsuit in the same court.
In both cases, the Company has filed or plans to file motions to
dismiss the claims. Plaintiffs in both cases have served document
requests, but no other discovery is being sought at this time.
The Company believes that the allegations against it are without merit
and intends to contest the allegations vigorously.
MITSUBISHI PHARMA: Stock Hits Low After News Of Hepatitis-C Suit
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Investors continued to dump the stock of Mitsubishi Pharma Corp. on the
news that a group of hepatitis C patients to whom was administered a
blood product called fibrinogen, is likely to file a class action suit
seeking damages against the Company and the government, according to
the JIJI Press English News Service.
Company shares fell to 926 yen on the Tokyo Stock Exchange Tuesday
morning, down 32 yen from Monday, rewriting its year-to-date low for
two days in a row.
The Company announced on Monday that it will start selling a new
quinolone antibacterial agent jointly with Toyama Chemical Co., but the
news failed to impress investors because contribution by the new drug
to the Company's sales is seen to be limited.
PHILADELPHIA: Lawsuit Considered Due to Impending Property Tax Hike
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Center City homeowners, outraged by skyrocketing property taxes next
year, are besieging the office of City Councilman Frank DiCicco, who
offered to carry their fight personally to the Board of Revision of
Taxes, The Philadelphia Inquirer reports.
"I will file the appeal on their behalf and appear at these hearings,"
said the Councilman. "These proposed increases are outrageous, unwise
and totally counterproductive." If his constituents are still unhappy
after their appeals, Mr. DiCicco said that he will consider filing a
proposed class action to remedy the situation.
Councilman DiCicco is just one of several City Council members, who in
the past week have reacted to floods of phone calls from homeowners
shocked by the recently arrived 2003 real estate tax bills. Those
bills, reflecting the boom in the city's real estate prices, have shown
tax hikes of 50 to 100 percent, in some cases. In all, about 270,000
of the city's 485,000 households have been told by the Board of
Revision of Taxes that their taxes will go up next year.
The city is not increasing its tax rate, which is 2.664 percent, or
$2,664 per $100,000 of house value. That would require a vote of the
City Council. Instead, taxes are going up because city assessors have
determined that housing values have risen.
In response, Councilman DiCicco, Council President Anna C. Verna and
Councilwoman Marian B. Tasco have announced that they will hold a
series of meetings to discuss property-tax issues. Mr. DiCicco said
his office will be mailing his constituents a letter explaining the
appeal process and offering to help residents fill out their forms.
The Councilman will himself make the appeals if necessary.
David Glancey, who chairs the Board of Revision of Taxes, said that he
is just doing his job which mandates that he follow the market value of
properties. "What Frank DiCicco is doing is what he should do," Mr.
Glancey said. "He is serving his constituents. My job is different.
I don't see this as a fight - I see it as a process.That process
includes appeals."
Property owners who want to contest the assessment of their property
values have until October 7 to file an appeal. The first appeals will
be heard during the second week of November and will continue until we
finish, Mr. Glancey said.
The idea of bringing the courts into the tax imbroglio has some
precedent. In 1981, a Common Pleas Court Judge issued a consent decree
that limited increases in tax bills to 15 percent per year beginning in
1982. This was done "to achieve a uniform level of real estate tax
assessments in the City of Philadelphia over a six-year period."
Mr. DiCicco said the current tax increases are "counterproductive and a
serious disincentive for people to continue to live in the city."
"Sale signs are going up even as we speak," said Mr. DiCicco. "To say
that the middle class or upper middle case is not leaving, is belied by
the activity we have seen."
PRICELINE.COM: CT Court Issues Orders For Pretrial Proceedings in Suit
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The United States District Court for the District of Connecticut issued
scheduling orders relating to pretrial proceedings in the consolidated
securities class action pending against priceline.com, Inc. and:
(1) Richard S. Braddock,
(2) Daniel H. Schulman and
(3) Jay S. Walker
The consolidated suit was commenced subsequent to the Company's
announcement on September 27, 2000 that revenues for the third quarter
2000 would not meet expectations.
On February 5, 2002, Amerindo Investment Advisors, Inc., who is one of
the lead plaintiffs in the consolidated action, made a motion for leave
to withdraw as lead plaintiff in this action, but the court has yet to
rule on that motion.
On February 28, 2002, the Company filed a motion to dismiss the
consolidated amended complaint. That motion has been fully briefed,
but the Court has yet to rule on that motion.
PRICELINE.COM: Oral Arguments For Dismissal Held, But Court Yet To Rule
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The Court of Chancery of Delaware, County of New Castle, State of
Delaware heard oral arguments on the motion to dismiss the shareholder
derivative action pending against priceline.com, Inc.'s Board of
Directors and certain of its current executive officers, as well as
priceline.com, Inc. (as a nominal defendant). The complaint alleges
breach of fiduciary duty and waste of corporate assets.
In February 2001, all defendants moved to dismiss the complaint for
failure to make a demand upon the Board of Directors and failure to
state a cause of action upon which relief can be granted. Pursuant to
a stipulation by the parties, an amended complaint was filed on June
21, 2001.
Defendants renewed their motion to dismiss on August 20, 2001, and
plaintiff served his opposition to that motion on October 26, 2001.
Defendants filed their reply brief on January 7, 2002. Oral argument on
that motion was conducted on April 23, 2002, and decision was reserved.
PRICELINE.COM: Asks NY Court To Dismiss Suit For Securities Violations
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priceline.com, Inc. asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action pending against it and:
(1) Richard S. Braddock,
(2) Jay S. Walker,
(3) Paul E. Francis,
(4) Nancy B. Peretsman,
(5) Timothy G. Brier,
(6) Morgan Stanley Dean Witter & Co.,
(7) Goldman Sachs & Co.,
(8) Merrill Lynch, Pierce, Fenner & Smith, Inc.,
(9) Robertson Stephens, Inc. (as successor-in-interest to
BancBoston),
(10) Credit Suisse First Boston Corp. (as successor-in-interest to
Donaldson Lufkin & Jenrette Securities Corp.),
(11) Allen & Co., Inc. and
(12) Salomon Smith Barney, Inc.
The complaints allege, among other things, that the Company and the
individual defendants named in the complaints violated the federal
securities laws by issuing and selling the Company's common stock in
the Company's March 1999 initial public offering without disclosing to
investors that some of the underwriters in the offering, including the
lead underwriters, had allegedly solicited and received excessive and
undisclosed commissions from certain investors.
By Orders of Judge Mukasey and Judge Scheindlin dated August 8, 2001,
these cases were consolidated for pre-trial purposes with hundreds of
other cases, which contain allegations concerning the allocation of
shares in the initial public offerings of companies other than
priceline.com.
In April 2002, plaintiffs filed a consolidated amended suit in these
cases, with the suit making similar allegations described to those
above but with respect to both the Company's March 1999 initial public
offering and its August 1999 second public offering of common stock.
Priceline, Mr. Braddock, Mr. Walker, Mr. Francis, Ms. Peretsman, and
Mr. Brier, together with other issuer defendants in the consolidated
litigation, filed a joint motion to dismiss on July 15, 2002.
Plaintiffs have yet to file papers in opposition to that motion.
The Company has not responded to the consolidated suit and the time
within which to do so has not yet expired.
RAZORFISH INC.: Asks NY Court To Dismiss Suit For Securities Violations
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Razorfish, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action pending against it and certain of its present and former
officers and directors.
The consolidated suit alleges that the underwriters of the Company's
initial public offering engaged in improper compensation practices that
were not disclosed in the offering's prospectus, among other things.
The improper compensation practices allegedly include charging third-
party clients of the underwriters excess commissions in exchange for
allocations of IPO shares or engaging in certain undisclosed market
stabilization practices in order to artificially inflate the price of
the stock in the after-market.
The amended complaint includes claims against the Company and the
individual defendants under Section 11 of the Securities Act, and
Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder. The amended complaint also contains claims against the
individual defendants under Section 15 of the Securities Act and
Section 20(a) of the Exchange Act.
Similar allegations have been made against more than 300 other issuers
and their underwriters. The Company intends to defend these cases
vigorously but cannot currently predict the outcome.
On July 1, 2002, certain underwriters of the company's initial public
offering (specifically, Credit Suisse First Boston Corporation,
BancBoston Robertson Stephens Inc., BT Alex. Brown Inc., and Lehman
Brothers, Inc.) and other underwriters named in the consolidated action
moved to dismiss all of the IPO Allocation Litigations, including the
action involving the Company. On July 15, 2002, the Company and the
individual defendants also moved to dismiss the litigation.
Due to the inherent uncertainties of litigation and because the
litigation is at a preliminary stage, the Company cannot accurately
predict the ultimate outcome of the motions.
SEQUENOM INC.: Asks NY Court To Dismiss Securities Violations Suit
------------------------------------------------------------------
Sequenom, Inc. asked the United States District Court for the Southern
District of New York to dismiss the securities class action pending
against it and certain of our current or former officers and directors.
The suit, commenced by Collegeware USA, alleges that the Company,
certain of its officers and directors, and the underwriters of its
initial public offering (IPO) violated the federal securities laws
because the Company's IPO registration statement and prospectus
contained untrue statements of material fact or omitted material facts
regarding the compensation to be received by, and the stock
allocation practices of, the IPO underwriters.
Similar complaints were filed in the same court against hundreds of
other public companies that conducted initial public offerings, or
IPOs, of their common stock in the late 1990s and early 2000.
In April 2002, the plaintiffs filed an amended complaint against the
Company and some of our officers and directors. The Company has not
been required to answer or respond to either complaint, and no
discovery has been served on the Company.
In July 2002, the issuers, directors and officers named as defendants
in the In re IPO Securities Litigation cases (including the Company and
some of its officers and directors) filed a motion to dismiss all such
cases for failure to state a claim against the issuers, directors or
officers.
The Company denies all material allegations and intends to defend the
action vigorously.
TENFOLD CORPORATION: Signs MOU To Settle Consolidated Securities Suit
---------------------------------------------------------------------
TenFold Corporation (Nasdaq: TENF) signed a memorandum of understanding
for the settlement of the consolidated federal securities suit against
it and certain of its former and current officers and directors, in the
United States District Court of Utah.
The suit alleges that:
(1) the Company improperly recognized revenues on some of the
Company's projects;
(2) the Company failed to maintain sufficient accounting reserves
to cover the risk of contract disputes or cancellations;
(3) the Company issued falsely optimistic statements that did not
disclose these accounting issues; and
(4) the Company insiders sold stock in early calendar year 2000
while knowing about these issues.
The Company filed a motion to dismiss the amended complaint in June
2001, which the court granted, but allowed the plaintiffs leave to make
a motion to amend their complaint. The plaintiffs have filed a motion
to amend their complaint and the Company has filed a written response.
The court has heard oral arguments on this motion on August 20, 2002.
The settlement, which is subject to court approval, provides payment by
the Company's insurers for the benefit of a class of Company
shareholders.
"We are pleased with the agreement," said Jonathan Johnson, Executive
Vice President and Chief Financial Officer of TenFold Corporation. "It
is gratifying to have this matter settled."
"Management can continue to sharpen their focus on the company's future
and our strategic goal of emerging as a growth technology company,"
added Nancy Harvey, Company CEO. "Our long term interests are much
better served by focusing on customers and technology rather than
litigation matters."
TEXAS: Consumers Get Partial Win On Warranties, Right To Safe House
-------------------------------------------------------------------
Consumers who buy a newly-built house have a right to expect a safe
house to live in, the Texas Supreme Court ruled, the Associated
Press Newswires reported.
The court was considering a lawsuit over a homebuilder's new-
construction warranty waiver that was part of the builder's standard
contract. A group of San Antonio homeowners were claiming it violated
building standards implied in state law.
The Texas Supreme Court, in a 7 to 2, opinion, said that Texas law
protects a consumer's right to a new home that is safe to live in - for
example, to have a house that is not about to cave in. Those
protections cannot be waived in most cases, the court said. However,
it also said that an implied warranty of good workmanship, such as
kitchen floors that don't peel up or walls that crack, can be waived.
The lawsuit centered on one paragraph Centex Homes used in its standard
sales agreement. It said that buyers waived the general protections of
state law and accepted the company's "express warranty." These
detailed but limited policies spell out what repairs the builder will
make.
Several San Antonio homeowners filed a lawsuit, seeking class action
status, against Centex Homes when the builder said it was not
responsible for cracks in their foundations. The lawyers for the San
Antonio homeowners contended that Centex was shirking its
responsibility to provide a good house and that it was forcing people
to ignore repairs or pay for them out of their own pockets.
The appeals court said the quality workmanship warranty can be waived
if the agreement details the manner and quality of the construction.
Such a deal actually could be better than the implied warranty under
state law, said the court. The court sent the case back to the trial
court to consider whether the Centex warranty meets that standard.
Centex Homes spokesman Neil Devroy said the company's express warranty
meets or exceeds any implied warranty under law.
Joe Longley, an Austin attorney who argued the case before the Supreme
Court for the consumers, said the safe living standard and workmanship
still could be tied together. If a leaky roof or faulty pipe caused
mold contamination, poor workmanship could lead, therefore, to an
unsafe building and force a family out of their home, he said.
"Now the consumer will have another resource to look at other than
their insurance policy," Mr. Longley said. "This still has a lot of
lawyering to be done."
Reggie James, director of Consumers Union's southwest regional office,
appears to be in accord with Mr. Longley, calling the decision "a
partial victory for consumers." Mr. James added, "There has been a
trend of waivers of consumers rights, as sellers across the board are
trying to duck responsibility. I wish (the court) had gone further."
TREX COMPANY: Securities Suit Dismissed For Failure To State Claim
------------------------------------------------------------------
The United States District Court for the Western District of Virginia
dismissed for failure to state a claim the consolidated securities
class action pending against Trex Co., Inc. and:
(1) Robert G. Matheny, the President and a director,
(2) Roger A. Wittenberg, the Executive Vice President of Material
Sourcing and International Operations and a director,
(3) Anthony J. Cavanna, the Executive Vice President and Chief
Financial Officer and a director
(4) Andrew U. Ferrari, the Executive Vice President of Marketing
and Business Development and a director
The suit, filed on behalf of purchasers of the Company's securities
between November 2, 2000 and June 18, 2001, alleges that the defendants
violated Sections 10(b) and 20(a) of and Rule 10b-5 under the
Securities Exchange Act of 1934 by making false and misleading public
statements or omissions concerning the Company's operating and
financial results, expectations, and business and by filing misleading
reports on Forms 10-Q and 10-K with the Securities and Exchange
Commission.
In January 2002, the defendants filed a motion to have the amended
consolidated complaint dismissed with prejudice. By a final order
entered on May 2002, the court dismissed the consolidated amended
complaint. In the memorandum opinion, the court found that the
plaintiffs had not pleaded facts raising a strong inference that any
disclosure challenged was made with fraudulent intent or was materially
misleading or omissive.
New Securities Fraud Suits
CONSECO INC.: Kwasi Asiedu Commences Securities Fraud Suit in S.D. IN
---------------------------------------------------------------------
Kwasi Asiedu initiated a securities class action in the United States
District Court for the Southern District of Indiana on behalf of
shareholders who purchased securities of Conseco, Inc. during the
period between October 30, 2001 and July 15, 2002. The suit names as
defendant the Company and:
(1) Gary C. Wendt,
(2) William J. Shea and
(3) Charles B. Chokel
The suit charges the defendants with violations of federal securities
laws. Among other things, plaintiff claims that defendants' omissions
and misleading statements regarding the nature of the Company's
business and financial condition caused the Company's stock price to
become artificially inflated, inflicting damages on investors.
For more details, contact Kwasi Asiedu by Mail: 3858 Carson Street #204
Torrance, CA 90503 or by Phone: 310-792-3948
DUANE READE: Abbey Gardy Commences Securities Fraud Suit in S.D. NY
-------------------------------------------------------------------
Abbey Gardy, LLP initiated a securities class action against Duane
Reade, Inc. (NYSE:DRD) and its Chairman of the Board in the United
States District Court for the Southern District of New York, on behalf
of all persons or entities who purchased Company securities during the
period from April 25, 2002 and July 24, 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 during the class period, thereby artificially inflating the
price of Company securities.
On April 25, 2002, the start of the class period, defendants issued
Duane's First Quarter 2002 earnings new release for the quarter ending
March 31, 2002. The Company reported recorded first quarter sales and
earnings results as follows: net sales increased 12.5% to $305.8
million and net income was $5.3 million, or $0.22 per share, before a
previously disclosed one-time non-cash charge, compared to net income
of $2.6 million, or $0.14 per share, in the prior year period.
With respect to the slight decline in gross profit margin for the
quarter, defendants stated in the news release that it was "primarily
attributable to the temporary dampening of front-end sales in the post
September 11 period and also due to a $0.4 million LIFO provision in
the period."
In addition, defendants misled the public by presenting a very positive
outlook for the second quarter projecting that Duane Reade would earn
between $0.40 to $0.44 cents per share. Suddenly, on July 25, 2002,
defendants issued a news release announcing that Duane Reade's second
quarter profits had plummeted by more than half because Duane Reade had
failed to disclose previously that:
(1) in connection with the "$218 convertible notes offering,"
which was completed in April 2002, it had incurred expenses of
$7.7 million, after tax, which expenses would sharply reduce
Duane Reade's profits in the second quarter of 2002 and cause
Duane Reade to report earnings significantly lower than the
level defendants told the market to expect;
(2) had sharply lowered prices in their stores commencing in April
2002 and planned to continue such program throughout the
second quarter in an effort to increase revenues, knowing that
this would cause reduced profit margins in the second quarter;
(3) was experiencing increased "shrink," primarily due to
increased theft and vendor errors, which would further erode
profits in the second quarter of 2002;
(4) was experiencing an increase in sales of generic drugs as a
percentage of total drug sales, which sales were at lower
prices than sales of branded equivalents;
(5) was experiencing a fall-off in higher margin items, including
cosmetics, snacks, jewelry and toys; and
(6) had embarked on a program, beginning in April 2002 when
defendants learned that they would receive $9 million in
business interruption insurance proceeds from the claims
submitted in the aftermath of September 11, to open in the
second quarter five additional stores to the number of new
stores originally planned to be opened during the second
quarter which, together with the three additional unplanned
stores opened in the first quarter of 2002, would cause Duane
Reade to incur additional costs of $1.5 million, including
$800,000 in store pre-opening expenses, in the second quarter
of 2002.
In response to the surprise negative announcement on July 25, 2002, the
price of the Company's common stock dropped from a closing price of
$23.55 per share on July 24, 2002 to a closing price of $14.60 per
share on July 25, 2002.
For more details, contact Nancy Kaboolian by Phone: 800-889-3701 by E-
mail: nkaboolian@abbeygardy.com or visit the firm's Website:
http://www.abbeygardy.com
ECLIPSYS CORPORATION: Weiss & Yourman Lodges Securities Suit in S.D. FL
-----------------------------------------------------------------------
Weiss & Yourman initiated a securities class action against Eclipsys
Corporation (NASDAQ: ECLP), and certain of its officers and directors
in the United States District Court for the Southern District of
Florida, on behalf of purchasers of Company securities between July 23,
2001 and June 27, 2002.
The complaint charges the defendants with violations of the Securities
Exchange Act of 1934. The complaint alleges that defendants issued
false and misleading statements, which artificially inflated the stock.
For more details, contact Mark D. Smilow, David C. Katz, and/or James
E. Tullman by Mail: The French Building, 551 Fifth Avenue, Suite 1600,
New York NY 10176 by Phone: (888) 593-4771 or (212) 682-3025 or by E-
mail: info@wynyc.com
FIRST HORIZON: Cauley Geller Commences Securities Fraud Suit in N.D. GA
-----------------------------------------------------------------------
Cauley Geller Bowman & Coates, LLP initiated a securities class action
in the United States District Court for the Northern District of
Georgia on behalf of purchasers of First Horizon Pharmaceutical
Corporation (Nasdaq: FHRX) publicly traded securities during the period
between April 24, 2002 and July 2, 2002, inclusive.
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, and Sections 11, 12(a)(2) and 15 of the Securities Act of
1933, by issuing a series of materially false and misleading statements
to the market.
On April 24, 2002, the Company completed a public offering of
securities, selling 6.5 million shares of common stock at an offering
price of $21.75 per share, pursuant to a Prospectus declared effective
by the SEC on April 18, 2002.
The Company failed to disclose material information in the Prospectus
relating to two products, Tanafed Suspension (a pediatric liquid and
allergy product) and Prenate GT (a prescription prenatal vitamin). The
Company touted the market for these products highly in its Prospectus.
However, the market for these products was severely declining and
defendants had flooded wholesalers with Prenate GT inventory in the
first quarter of 2002 in order to report strong sales prior to the
secondary offering.
Belatedly, defendants disclosed that due to price erosion arising from
generic competition, the Company's products had not been widely
accepted by the market.
In addition, sales growth from the Company's newly acquired "Sular"
drug line had failed to yield strong results, and a promised
redeployment of the Company's sales force similarly failed to boost its
bottom line.
As a result of the Company's misrepresentations, the Company's
investors have sustained tremendous losses, and stand to lose much more
as the Company's financial condition continues to decline. On July 2,
2002, the Company shocked the market by revealing that for the second
quarter of 2002, the Company expected to report revenues of between $25
and $26 million, and earnings per share between $0.00 and $0.02,
excluding a $2.2 million debt write-off.
For the full year, the Company revised its guidance to $0.34 a share, a
far cry from its earlier guidance of $0.56 to $0.57 a share. A July 2,
2002 press release attributed the massive shortfall mainly to "greater
than expected erosion of sales in the second quarter" of Tanafed and
Prenate GT, as well as "distraction" arising out of a sales force
"realignment."
In response to the Company's devastating news concerning the lack of
acceptance of two of the Company's key products, the Company's stock
price plummeted by an astonishing 81% or by $14.74 to $3.51, on volumes
of 16.4 million shares, about 30 times the daily average.
For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com
GOLDMAN SACHS: Beatie and Osborn Commences Securities Fraud Suit in NY
----------------------------------------------------------------------
The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased Covad Communications
Company (NYSE: COVD) common stock during the period between January 27,
1999 and December 18, 2000.
The complaint alleges that Goldman Sachs & Co., Credit Suisse First
Boston Corporation and Morgan Stanley Dean Witter & Co., Inc. urged
investors to purchase Covad stock when defendants knew or should have
known that such purchases were not a good investment. The complaint
alleges that defendants:
(1) issued "Buy" recommendations about Covad without any rational
economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
INTERPUBLIC GROUP: Weiss & Yourman Lodges Securities Suit in S.D. NY
--------------------------------------------------------------------
Weiss & Yourman initiated a securities class action The Interpublic
Group of Companies, Inc. (NYSE: IPG), and certain of its officers and
directors was commenced in the United States District Court for the
Southern District of New York, on behalf of purchasers of Interpublic
securities between October 28, 1997 and August 13, 2002.
The complaint charges the defendants with violations of the Securities
Exchange Act of 1934. The complaint alleges that defendants issued
false and misleading statements, which artificially inflated the stock.
For more details, contact David C. Katz, James E. Tullman, and/or Mark
D. Smilow by Mail: The French Building, 551 Fifth Avenue, Suite 1600,
New York NY 10176 by Phone: 888-593-4771 or 212-682-3025 by E-mail:
info@wynyc.com
INTERPUBLIC GROUP: Abbey Gardy Commences Securities Suit in FL Court
--------------------------------------------------------------------
Abbey Gardy, LLP has initiated a securities class action against The
Interpublic Group of Companies, Inc. (NYSE:IPG), and certain of its
officers and directors in the United States District Court of Florida,
on behalf of all persons or entities who purchased Company securities
during the period from October 28, 1997 to August 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 during the class period, thereby artificially inflating the
price of Company securities.
The complaint alleges that throughout the class period, the Company
issued a series of materially false and misleading statements regarding
the Company's earnings and financial performance.
The complaint alleges, among other things, that these statements were
materially false and misleading because the Company engaged in improper
accounting practices which had the effect of materially overstating its
reported earnings.
On August 5, 2002, the Company announced that it would be rescheduling
the release of it second quarter 2002 earnings "to accommodate the
Audit Committee of its Board of Directors." In response to defendants'
announcement shares of the Company dropped $4.69 per share, or 23.8%,
to close at $14.99 per share.
On August 13, 2002, the Company announced, among other things, that it
had identified $68.5 million of charges, principally in Europe, which
had not been properly expensed and which will result in the restatement
of the Company's previously issued financial statements going back to
1997.
For more details, contact Nancy Kaboolian by Phone: 800-889-3701 by E-
mail: nkaboolian@abbeygardy.com or visit the firm's Website:
http://www.abbeygardy.com
MERRILL LYNCH: Beatie and Osborn Commences Securities Fraud Suit in NY
----------------------------------------------------------------------
The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased Aether Systems, Inc.
(NYSE: AETH) common stock during the period between November 15, 1999
and February 20, 2002.
The complaint alleges that Merrill Lynch & Co., Inc. and Henry Blodget
urged investors to purchase Aether stock when defendants knew or should
have known that such purchases were not a good investment. The
complaint alleges that defendants:
(1) issued "Buy" recommendations about Aether without any rational
economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor, New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
MERRILL LYNCH: Beatie and Osborn Commences Securities Fraud Suit in NY
----------------------------------------------------------------------
The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased Inktomi Corporation
(NYSE: INKTM) common stock during the period between June 10, 1998 and
April 3, 2001.
The complaint alleges that Merrill Lynch & Co., Inc., Morgan Stanley
Dean Witter & Co., Inc., Henry Blodget and Mary Meeker urged investors
to purchase Inktomi stock when defendants knew or should have known
that such purchases were not a good investment.
The complaint alleges that defendants:
(1) issued "Buy" recommendations about Inktomi without any
rational economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
MERRILL LYNCH: Beatie and Osborn Lodges Securities Fraud Suit in NY
-------------------------------------------------------------------
The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased Internet Capital Group,
Inc. (NYSE: ICGE) common stock during the period between August 30,
1999 and November 9, 2000.
The complaint alleges that Merrill Lynch & Co., Inc. and Henry Blodget
urged investors to purchase Internet Capital stock when defendants knew
or should have known that such purchases were not a good investment.
The complaint alleges that defendants:
(1) issued "Buy" recommendations about Internet Capital without
any rational economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor, New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
MORGAN STANLEY: Schiffrin & Barroway Lodges Securities Suit in S.D. 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 Morgan Stanley Dean
Witter Technology Fund shares, of all four share classes (Nasdaq: TEKAX
through TEKDX) from the public offering for the Fund on September 25,
2000 through July 31, 2002, inclusive.
The complaint charges that defendants were:
(1) the underwriters for the common stock of certain of the
companies in the Technology Fund's portfolio;
(2) the investment bankers and corporate finance specialists for
certain of the companies whose securities are in the Fund's
portfolio;
(3) seeking to obtain additional investment banking business from
these present and former clients and from other companies
whose shares also were/are in the Fund's portfolio;
(4) the issuers of the shares in the Fund;
(5) preparing and publicly disseminating research reports and
recommendations on many of the companies whose shares were in
the Fund's portfolio; and
(6) the broker for certain members of the class
This action arises as a result of the issuance by the defendants of
shares in the Fund, and concerns material misstatements and omissions
by defendants in the Prospectus, relating to defendants' conflicts of
interest, which include but are not limited to the following:
(i) defendants failed to disclose and omitted material information
that MSDW had had investment banking relationships with,
including having brought public, certain of the companies
whose securities were part of the Fund's portfolio.
Defendants disclosed neither this general fact nor the
identities of the particular companies with which it had
investment banking relationships;
(ii) defendants failed to disclose and omitted material information
concerning that MSDW was continuing to seek investment banking
relationships with many of the companies whose securities were
part of the Fund's portfolio; and
(iii) defendants failed to disclose and omitted material information
concerning that a material part of the total compensation paid
to MSDW research analysts was based upon obtaining investment
banking business for MSDW and not upon the accuracy of their
research about a given company.
Hence, MSDW and its affiliated companies including the Fund recommended
investments in and/or invested in companies in order to enhance MSDW's
opportunity to obtain investment banking business from those companies
(without regard to whether they were good investments for the investors
including plaintiffs and the Class).
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
SALOMON SMITH: Klayman & Toskes Commences Probe For Nortel Employees
--------------------------------------------------------------------
Klayman & Toskes, PA is initiating an aggressive investigation on
behalf of Nortel Networks Corporation (NYSE:NT) Employee Stock Option
Plan (ESOP) participants. The law firm is preparing to file claims
before the New York Stock Exchange against Salomon Smith Barney, Inc.
for alleged unlawful conduct at its Costa Mesa, California branch
office.
The firm has been retained by large groups of Technology and
Telecommunications ESOP participants with damages that exceed $100
million. The firm previously filed claims on behalf of ESOP
participants against Salomon, Merrill Lynch, Pierce, Fenner, & Smith,
Inc., Morgan Stanley Dean Witter, and UBS PaineWebber.
The suits allege that the firms failed to recommend to ESOP
participants hedging strategies to protect their concentrated position
in their company's stock as a result of the exercise of their stock
options through the use of margin.
The claims focus on the underwriters' mismanagement of their clients'
portfolios given the fact that there were option strategies available
at the time of exercise that would have protected the value of the
margined, concentrated portfolio, known as a "zero cost" collar.
For more details, contact Lawrence L. Klayman by Phone: 888-997-9956 or
visit the firm's Website: http://www.nasd-law.com
SALOMON SMITH: Schiffrin Barroway Lodges Securities Suit in S.D. 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 on behalf of purchasers of
AT&T Corp. common stock (NYSE: T) between November 29, 1999 and August
22, 2002, inclusive or of the AT&T Wireless tracking stock (NYSE: AWE)
from its inception until August 22, 2002, inclusive against:
(1) Salomon Smith Barney, Inc.,
(2) Jack Grubman, analyst,
(3) Citigroup, Inc., Salomon's parent company, and
(4) Sanford Weill, Citigroup CEO
The complaint charges defendants with recommending the purchase of AT&T
common stock without regard to the factual basis and without disclosing
its conflicts of interest. When issuing the analyst report, the
Salomon and Mr. Grubman failed to disclose significant, material
conflicts of interest, including that, in an explicit or implicit quid
pro quo, Salomon was granted a lucrative role in the April 2000
issuance of an AT&T Wireless tracking stock, after Mr. Grubman, at
AT&T's request, passed to Mr. Grubman by Mr. Weill, raised his
recommendation of AT&T in November 1999 from "neutral" to "buy."
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
SALOMON SMITH: Cauley Geller Commences Securities Fraud Suit in S.D. NY
-----------------------------------------------------------------------
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 AT&T Corp. common stock (NYSE: T)
during the period between November 29, 1999 and August 22, 2002,
inclusive or of the AT&T Wireless tracking stock (NYSE: AWE) from its
inception until August 22, 2002, inclusive (the "Class Period"),
against:
(1) Salomon Smith Barney, Inc.,
(2) Jack Grubman, analyst,
(3) Citigroup, Inc., Salomon's parent company and
(4) Sanford Weill, Citigroup CEO
The complaint charges defendants with recommending the purchase of AT&T
common stock without regard to the factual basis and without disclosing
its conflicts of interest. When issuing the analyst report, the
Salomon and Mr. Grubman failed to disclose significant, material
conflicts of interest, including in an explicit or implicit quid pro
quo, Salomon was granted a lucrative role in the April 2000 issuance of
an AT&T Wireless tracking stock, after Mr. Grubman, at AT&T's request,
passed to Mr. Grubman by Mr. Weill, raised his recommendation of AT&T
in November 1999 from "neutral" to "buy."
For more details, contact Jackie Addison, Sue Null or Ellie Baker by
Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 888-551-9944
by E-mail: info@cauleygeller.com or visit the firm's Website:
http://www.cauleygeller.com
SALOMON SMITH: Beatie and Osborn Commences Securities Fraud Suit in NY
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The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased Level 3 Communications,
Inc. (NYSE: LVLT) common stock during the period between January 4,
1999 and June 18, 2001.
The complaint alleges that Salomon Smith Barney Inc., Jack Grubman and
Morgan Stanley Dean Witter & Co., Inc. urged investors to purchase
Level 3 stock when defendants knew or should have known that such
purchases were not a good investment. The complaint alleges that
defendants:
(1) issued "Buy" recommendations about Level 3 without any
rational economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
SALOMON SMITH: Beatie and Osborn Commences Securities Fraud Suit in NY
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The Law Firm of Beatie and Osborn LLP initiated a securities class
action in the United States District Court for the Southern District of
New York on behalf of individuals who purchased AT&T Corporation (NYSE:
T) common stock during the period between November 29, 1999 and October
27, 2000.
The complaint alleges that Salomon Smith Barney Inc. and Jack Grubman
urged investors to purchase AT&T stock when defendants knew or should
have known that such purchases were not a good investment. The
complaint alleges that defendants:
(1) issued "Buy" recommendations about AT&T without any rational
economic basis;
(2) failed to disclose that they were issuing "Buy"
recommendations to obtain investment banking business; and
(3) concealed significant, material conflicts of interests that
prevented them from providing independent objective analysis.
For more details, contact Eduard Korsinsky or Benjamin D. Coleman by
Mail: 521 Fifth Avenue, 34th Floor New York, New York 10175 by Phone:
800-891-6305 by Fax: 212-888-9664 by E-mail:
clientrelations@bandolaw.com or visit the firm's Website:
http://www.bandolaw.com
SALOMON SMITH: Klayman & Toskes Files Suit For Worldcom ESOP Members
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Klayman & Toskes, PA initiated a class action before the New York Stock
Exchange on behalf of a WorldCom, Inc. (Pink Sheets:WCOEQ) Employee
Stock Option Plan (ESOP) participants against Salomon Smith Barney,
Inc., a unit of Citigroup, Inc., for alleged unlawful conduct at its
Atlanta, Georgia, Peach Tree Road branch office.
The firm has been retained by large groups of WorldCom ESOP
participants with damages that exceed $75 million. The firm has
previously filed claims against Salomon, Merrill Lynch, Pierce, Fenner,
& Smith, Inc. ("Merrill"), and Morgan Stanley Dean Witter.
The suits allege that the firms failed to recommend to WorldCom ESOP
participants hedging strategies to protect their concentrated position
in WorldCom as a result of the exercise of their stock options through
the use of margin.
The claims focus on Salomon's, Merrill's, and Morgan Stanley's
mismanagement of their clients' portfolios given the fact that there
were option strategies available at the time of exercise that would
have protected the value of the margined, concentrated portfolio, known
as a "zero cost" collar.
Numerous class action lawsuits have been filed. These actions are
distinct and separate from the arbitration claims that have been filed
by K&T on behalf of WorldCom ESOP participants.
For more details, contact Lawrence L. Klayman by Phone: 888-997-9956 or
visit the firm's Website: http://www.nasd-law.com
VIVENDI UNIVERSAL: Berger & Montague Files Amended NY Securities Suit
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Berger & Montague, PC filed an amended class action suit against
Vivendi Universal, S.A. (NYSE: V) and certain of its principal officers
and directors 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 Company's securities between October 30, 2000
and August 13, 2002.
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 Company securities.
Prior to and during the class period, defendant Jean-Marie Messier took
Vivendi on an acquisition binge that, according to published reports,
resulted in the Company amassing approximately $18 billion in debt as
he turned the Company from a water concern into an entertainment
powerhouse.
During the class period, defendants made misrepresentations and/or
omissions of material fact, including the following:
(1) Misstating Vivendi's cash position and ability to service its
debt obligations;
(2) Misstating Vivendi's earnings in its public filings with the
SEC and elsewhere as a result of failing to record write-downs
of goodwill and other intangible assets associated with, inter
alia, the acquisition of U.S. Filter, the equity investment in
Elektrim Telekomunikacja, and the merger among Vivendi,
Seagram and Canal+ long after it had become apparent that such
assets were being carried at values vastly higher than their
true values;
(3) Failing to disclose that the exchange ratio for the merger
between MP3.com, Inc. and Vivendi was distorted due to
artificial inflation in the price of Vivendi American
Depositary Receipts (ADRs); and
(4) Failing to disclose that Vivendi had significant off-balance-
sheet liabilities, including undisclosed sales of put options
on tens of millions of dollars worth of Vivendi shares during
2001.
During the class period, defendants' false statements artificially
inflated Company ADRs to as high as $75.00 per ADR. Defendants
reported favorable, but misleading, financial results to the market and
represented that Vivendi was not as susceptible to economic problems as
competitors and that the Company had the "highest resiliency and lowest
sensitivity to recessionary environment." The defendants also
represented that Vivendi was successfully implementing recent mergers
which were being reorganized quickly to generate synergies.
These positive but false statements allowed the Company to complete
additional acquisitions in its $100 billion buying spree between 1998
and 2001. Late in June 2002, news leaked from Vivendi that its debt
was at alarming levels, causing Vivendi's ADRs to decline in price from
$28 to $20. Vivendi's ordinary shares declined in similar fashion.
Nonetheless, Mr. Messier reassured the market that liquidity was not a
problem. However, as ratings agencies continued to downgrade the
Company's debt, the ADRs and ordinary shares continued to decline.
On July 2, 2002, Vivendi's debt was downgraded again and the Company
was in danger of default. On July 3, 2002, Mr. Messier was forced to
resign.
For more details, contact Sherrie R. Savett, Carole A. Broderick,
Barbara A. Podell 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
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S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2002. All rights reserved. ISSN 1525-2272.
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