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C L A S S A C T I O N R E P O R T E R
Friday, June 4, 2004, Vol. 6, No. 110
Headlines
ACCREDITED HOME: Consumers Commence Unfair Trade Practices Suit
ACCREDITED HOME: CA Court Dismisses Consumer Suit With Prejudice
ACCREDITED HOME: Moves Overtime Wage Lawsuit To CA Federal Court
AIRGATE PCS: Plaintiffs Renew Lead Plaintiff Motions in GA Suit
AMERICA FIRST: Unitholders Lodge Suit V. America First Merger
APO HEALTH: Reaches Settlement For Unsolicited Fax Lawsuit in IN
ARIBA INC.: Plaintiffs File Amended Securities Fraud Suit in CA
BARCELONA NUT: Recalls Raw Almonds for Salmonella Contamination
CATHOLIC CHURCH: Kenneth Feinberg Tapped As Mediator in KY Suit
COVAD COMMUNICATIONS: Ex-General Counsel Files Suit v. Directors
DAVID LERNER: Reaches Settlement for SEC Cease-and-Desist Order
DIAMOND TRIUMPH: PA Customers Lodge Unfair Trade Practices Suit
DREAM ON: Recalls 20,000 Baby Walkers Because of Accident Hazard
ELI LILLY: Gilman & Pastor Lodges Consumer Fraud Suit in E.D. NY
ENRON CORPORATION: SEC Files, Settles Fraud Charges V. Ex-Exec
FAST FOOD LITIGATION: Proposed MO Laws To Blocks Obesity Suits
IDAHO: ID Residents To Start Receiving Taxol Settlement Checks
LOUDEYE CORPORATION: NY Suit Settlement To Be Completed in June
MAZDA NORTH: Recalls 106,000 Tribute SUVs Due To Crash Hazard
METROPOLITAN MARKET: Expands Raw Almond Recall Due To Salmonella
NEW ACCESS: TX A.G. Abbot Joins Consumer Complaint Settlement
NEWKIRK MASTER: CT Court Approves Investor Fraud Suit Settlement
NEWKIRK MASTER: Affiliates Reach Settlement For Derivative Suit
NISSAN NORTH: Recalls 26,000 Minivans Due To Door Latch Defect
OCCAM NETWORKS: CA Court Tentatively Approves Lawsuit Settlement
OCCAM NETWORKS: To Execute NY Settlement Documents by September
ONESOURCE INFORMATION: Faces Two Shareholder Suits in DE Court
PAYLESS SHOESOURCE: Recalls 441T Baby Shoes For Choking Hazard
POLARIS INDUSTRIES: Recalls 3,230 Motorcycles For Brake Defect
RITE AID: SEC Reaches Settlement With CFO in PA Fraud Lawsuit
ROYAL CANDY: Recalls Raw Almonds Due To Salmonella Contamination
SHOE PAVILION: CA Court Approves Tentative Overtime Lawsuit Pact
TOYOTA MOTOR: Recalls Highlander SUVs Due To Defective CPL Lever
TRIUMPH MOTOR: Recalls 18,998 Motorcycles For Defect, Fire Risk
UNITED HEALTHCARE: Faces Unfair Trade Practices Suit in NC Court
VERIZON WIRELESS: CA Court Approves Consumer Lawsuit Settlement
VERTICALNET INC.: NY Court to Review Suit Settlement Early 2004
WARREN ASSET: SEC Files, Settles Civil Securities Fraud Lawsuit
Asbestos Alert
ASBESTOS LITIGATION: ALSTOM Faces 2,090 Sickness Declarations
ASBESTOS LITIGATION: CSK Auto Explains Reserve Accrual
ASBESTOS LITIGATION: CSR Ltd. Named In 638 Employees' Claims
ASBESTOS LITIGATION: ISG Says Bethlehem Claims Have Been Stayed
ASBESTOS LITIGATION: Norcross Asbestos Lawsuits Show Increase
ASBESTOS LITIGATION: Owens Illinois Disposes of 310,000 Claims
ASBESTOS LITIGATION: SCPIE Losses Worth $65,000,000 Paid By HIG
ASBESTOS LITIGATION: M & F Strikes Deals With Pepsi And Cooper
ASBESTOS LITIGATION: St. Paul Travelers Resolves TPC Litigation
ASBESTOS LITIGATION: St. Paul Reveals Agreements May Be Restored
ASBESTOS LITIGATION: Standard Motors Maybe Liable In 3,400 Cases
ASBESTOS LITIGATION: WABTEC, Affiliates' Exposure Cases Rising
ASBESTOS ALERT: AXA Involved In Disputes Over Exposure Policy
ASBESTOS ALERT: Bunge Divulges Injury Claims Against Lesieur
ASBESTOS ALERT: JHI NV To Indemnify BPB U.S. For Liabilities
ASBESTOS ALERT: Old Republic Intl Discloses Reserves Information
ASBESTOS ALERT: PartnerRe Ltd. States Asbestos Claims Exposure
ASBESTOS ALERT: Transpacific Mines Closure Forced By Asbestosis
New Securities Fraud Cases
ALLOS THERAPEUTICS: Weinstein Kitchenoff Lodges Securities Suit
BISYS GROUP: Milberg Weiss Lodges Securities Lawsuit in S.D. NY
LEXAR MEDIA: Schiffrin & Barroway Lodges Securities Suit in CA
SALTON INC.: Anatoly Weiser Initiates Securities Suit in N.D. IL
SMITH BARNEY: Milberg Weiss Lodges Securities Suit in S.D. NY
*********
ACCREDITED HOME: Consumers Commence Unfair Trade Practices Suit
---------------------------------------------------------------
Accredited Home Lenders Holding Co. faces a class action
alleging that the Company misrepresents and inflates the amounts
it charges its borrowers for third-party fees in violation of
state laws, which prohibit unfair and deceptive trade practices.
The Company filed an answer to the complaint in January 2003,
but a schedule for briefing and hearing the motion for class
certification has not yet been established. There has been no
ruling on the merits of either the plaintiffs' individual claims
or the claims of the class.
ACCREDITED HOME: CA Court Dismisses Consumer Suit With Prejudice
----------------------------------------------------------------
The California State Court dismissed with prejudice a class
action filed against Accredited Home Lenders Holding Co., styled
"Silva v. Accredited Home Finance, et al." The suit alleges
that the Company violated a California statute restricting
prepayment charges, breached the covenant of good faith and fair
dealing, and constituted an unfair business practice.
In April 2004, the Company's demurrer to the complaint was
sustained without leave to amend and the action was dismissed
with prejudice. The plaintiff subsequently agreed to waive his
right to appeal in exchange for the Company's agreement to waive
its rights to costs and fees. This matter is now finally
resolved, the Company said in a regulatory filing.
ACCREDITED HOME: Moves Overtime Wage Lawsuit To CA Federal Court
----------------------------------------------------------------
Accredited Home Lenders Holding Co. removed the overtime class
action filed against it to the United States District Court in
California.
The suit alleges the Company violated California and federal law
by misclassifying the plaintiff, a commissioned loan officer, as
an exempt employee and failing to pay the plaintiff on an hourly
basis and for overtime worked. The plaintiff seeks to recover,
on behalf of himself and all of the Company's other similarly
situated current and former employees, lost wages and benefits,
general damages, multiple statutory penalties and interest,
attorneys' fees and costs of suit, and also seeks to
enjoin further violations of wage and overtime laws and
retaliation against employees who complain about such
violations.
The Company does not believe this matter will have a material
adverse effect on its business and is pursuing settlement
discussions. At the present time, the ultimate outcome of this
matter and the amount of liability, if any that may result is
not determinable and no amounts have been accrued in the
Company's financial statements with respect to this matter.
AIRGATE PCS: Plaintiffs Renew Lead Plaintiff Motions in GA Suit
---------------------------------------------------------------
Plaintiffs filed renewed lead plaintiff and lead counsel motions
for the class actions filed in the United States District Court
for the Northern District of Georgia against AirGate PCS, Inc.,
and:
(1) Thomas M. Dougherty,
(2) Barbara L. Blackford,
(3) Alan B. Catherall,
(4) Credit Suisse First Boston,
(5) Lehman Brothers,
(6) UBS Warburg LLC,
(7) William Blair & Company,
(8) Thomas Wiesel Partners LLC and
(9) TD Securities
The complaints do not specify an amount or range of damages that
the plaintiffs are seeking. The complaints seek class
certification and allege that the prospectus used in connection
with the secondary offering of the Company's common stock by
certain former iPCS shareholders on December 18, 2001 contained
materially false and misleading statements and omitted material
information necessary to make the statements in the prospectus
not false and misleading. The alleged omissions included:
(i) failure to disclose that in order to complete an
effective integration of iPCS, drastic changes would
have to be made to the Company's distribution
channels,
(ii) failure to disclose that the sales force in the
acquired iPCS markets would require extensive
restructuring and
(iii) failure to disclose that the "churn" or "turnover" rate
for subscribers would increase as a result of an
increase in the amount of sub-prime credit quality
subscribers the Company added from its merger with
iPCS.
On July 15, 2002, certain plaintiffs and their counsel filed a
motion seeking appointment as lead plaintiffs and lead counsel.
Subsequently, the court denied this motion without prejudice,
and two of the plaintiffs and their counsel filed a renewed
motion seeking appointment as lead plaintiffs and lead counsel.
On September 12, 2003, the court again denied the motion without
prejudice and on December 2, 2003, certain plaintiffs and their
counsel filed a modified renewed motion.
AMERICA FIRST: Unitholders Lodge Suit V. America First Merger
-------------------------------------------------------------
America First Real Estate Investment Partners LP faces a class
action filed in the Delaware Court of Chancery by two Unit
holders, Harvey Matcovsky and Gloria Rein. The suit also names
as defendants its General Partner and America First Companies,
L.L.C.
The plaintiffs seek to have the lawsuit certified as a class
action on behalf of all Units holders. The lawsuit alleges,
among other things, that the defendants have acted in violation
of their fiduciary duties to the Unit holders in connection with
the proposed merger of the Company with America First Apartment
Investors, Inc. The plaintiffs are seeking to enjoin the
proposed merger and unspecified damages and costs.
APO HEALTH: Reaches Settlement For Unsolicited Fax Lawsuit in IN
----------------------------------------------------------------
Apo Health, Inc. reached an out-of-court settlement with the
plaintiffs in the class action filed against it in the
Circuit/Superior Court of Marion County; Indiana, styled "Kenro,
Inc., on behalf of itself and all others similarly situated
against APO Health, Inc., Cause No. 490120101CP000016." The
lawsuit involved unsolicited broadcast faxes sent in the state
and had been certified as a class action.
On January 28, 2004, the Company announced that it had reached
an out of court settlement in the suit. The Company's attorneys
agreed to settle the litigation for up to $4.5 million that will
be placed in a settlement fund created and completely covered by
the Company's insurer.
ARIBA INC.: Plaintiffs File Amended Securities Fraud Suit in CA
---------------------------------------------------------------
Plaintiffs filed an amended consolidated securities class action
against Ariba, Inc. and certain of its current and former
officers and directors in the United States District Court for
the Northern District of California on behalf of a class of
purchasers of the Company's common stock in the period from
January 11, 2000 to January 15, 2003.
The complaints bring claims under the federal securities laws,
specifically Sections 10(b) and 20(a) of the Exchange Act,
relating to the Company's announcement that it would restate
certain of its consolidated financial statements, and, in the
case of two complaints, relating to its acquisition activity and
related accounting.
Specifically, these actions allege that certain of the Company's
prior consolidated financial statements contained false and
misleading statements or omissions relating to its failure to
properly recognize expenses and other financial items, as
reflected in the then proposed restatement. Plaintiffs contend
that such statements or omissions caused the stock price to be
artificially inflated. Plaintiffs seek compensatory damages as
well as other relief.
In a series of orders issued by the Court in February and March,
2003, these cases were deemed related to each other and assigned
to a single judge sitting in San Jose. On July 11, 2003,
following briefing and a hearing on related motions, the Court
entered two orders that together:
(1) consolidated the related cases for all purposes into a
single action captioned "In re Ariba, Inc. Securities
Litigation, Case No. C-03-00277 JF,"
(2) appointed a lead plaintiff, and
(3) approved the lead plaintiff's selection of counsel
On September 15, 2003, the lead plaintiff filed a Consolidated
Amended Complaint, which restated the allegations and claims
described above and added a claim pursuant to Section 14(a) of
the Exchange Act, based on the allegation that the Company
failed to disclose certain payments and executive compensation
items in its January 24, 2002 Proxy Statement.
On November 17, 2003, defendants filed a motion to dismiss the
action for failure to state a claim, which was fully briefed and
set for hearing on March 29, 2004. Prior to the hearing, the
parties stipulated that, in lieu of proceeding to a hearing on
defendants' motion, plaintiff would withdraw its complaint and
file a further amended complaint by April 16, 2004 and plaintiff
did so on that date. Defendants' motion to dismiss plaintiff's
further amended complaint is due to be filed on June 18, 2004.
This case is still in its early stages.
BARCELONA NUT: Recalls Raw Almonds for Salmonella Contamination
---------------------------------------------------------------
Barcelona Nut Company, 502 S. Mount Street, Baltimore, MD 21223
is conducting a voluntary recall on its distribution of raw
whole and diced almonds packaged as Barcelona Nuts, due to the
possibility of contamination with Salmonella Enteritidis. The
recall covers the following products, all with code dates of
081204 through 052505:
(1) 2.5 oz Cashew, Almond, Raisin Mix - UPC 0303002-00108
(2) 12 oz Cashew, Almond, Raisin Mix - UPC 2000109-21002
(3) 5 oz Cashew, Almond, Raisin Mix - UPC 0490109-13009
(4) 10 oz Almonds - UPC 3800101-35001
(5) 2.5 oz Almond & Raisin Mix - UPC 0303001-08918
(6) 2 oz Natural Almonds - UPC 0200101-08919
(7) 3 oz California Mix - UPC 0307002-59125
(8) 12 oz California Mix 2007002-21031
(9) 3 oz Mojo Mix - 0304202-08905
Salmonella is an organism, which can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weak immune systems. Healthy persons infected with
Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e., infected
aneurysms), endocarditis and arthritis.
Barcelona Nut Co. distributes these products nationally.
This recall is in follow up to a voluntary recall announced last
week by the producer of the almonds, Paramount Farms of
California, based on over 20 possible cases of illnesses
associated with the almonds. The cases were reported in
California, Arizona, Oregon, Washington, Utah, New Mexico,
Arkansas, Tennessee, Massachusetts and Michigan. We are working
with the FDA to assure that all potentially contaminated almonds
are removed from the marketplace and that all consumers are
notified of the recall.
The raw almonds should not be consumed but rather returned to
the point of purchase for a full refund. For further
information, call Barcelona Nut Co. at 1-800-296-6887 between
8AM and 4PM EDT.
CATHOLIC CHURCH: Kenneth Feinberg Tapped As Mediator in KY Suit
---------------------------------------------------------------
Kenneth Feinberg, administrator of the government fund for
September 11 victims has been appointed mediator in the United
States' first class action against the Diocese of Covington in
northern Kentucky over claims of sexual abuse by its priests,
the Associated Press reports. Mr. Feinberg, who will finish his
duties as special master of the September 11 victims'
compensation fund on June 15 has been tapped by both sides to
mediate the out-of-court talks.
The lawsuit, which was certified as a class action by another
judge in October, was filed on behalf of alleged molestation
victims since 1956. However, another judge had asked the
attorneys for a plan to resolve the case out of court rather
than at trial.
COVAD COMMUNICATIONS: Ex-General Counsel Files Suit v. Directors
----------------------------------------------------------------
Covad Communications Group, Inc.'s current and former directors
face a purported class action and a derivative action filed in
the Court of Chancery of the State of Delaware in and for New
Castle County, by Mr. Druv Khanna, the Company's former General
Counsel and Secretary.
In June 2002, Mr. Khanna was relieved of his duties. Shortly
thereafter, Mr. Khanna alleged that, over a period of years,
certain current and former directors and officers breached their
fiduciary duties to the Company by engaging in or approving
actions that constituted waste and self-dealing, that certain
current and former directors and officers had provided false
representations to the Company's s auditors and that he had been
relieved of his duties in retaliation for his being a purported
whistleblower and because of racial or national origin
discrimination.
In this action, Mr. Khanna seeks recovery on behalf of the
Company from the individual defendants for their purported
breach of fiduciary duty. Mr. Khanna also seeks to invalidate
the Company's election of directors in 2002 and 2003 because he
claims the Company's proxy statements were misleading.
DAVID LERNER: Reaches Settlement for SEC Cease-and-Desist Order
---------------------------------------------------------------
The Securities and Exchange Commission issued an Order Making
Findings and Imposing Remedial Sanctions and Cease-and-Desist
Order pursuant to Sections 15(b) and 21C of the Securities
Exchange Act of 1934 against David Lerner Associates, Inc., a
Syosset, N.Y.-based broker-dealer. Lerner consented to the
entry of the Order without admitting or denying the findings.
The Order finds that from December 1996 through August 1999,
Lerner was responsible for supervising its registered
representative Lawrence Merl, who on a number of occasions
during this period recommended, offered and caused to be
purchased for three customer accounts securities that were
unsuitable for the customers, given the customers' investment
objectives and financial situation, in violation of Section
17(a) of the Securities Act of 1933. Merl's customers desired
highly liquid bond or tax-free bond issues. Contrary to these
investment objectives, Merl recommended that the customers
purchase illiquid Real Estate Investment Trust (REIT) issues
collateralized by the customers' bond holdings. This investment
recommendation effectively rendered illiquid the customers'
holdings. As a result of Merl's unsuitable recommendations, his
three customers sustained $175,479 in aggregate losses.
The Order further finds that from July 1998 through January
1999, Lerner was responsible for supervising its registered
representative Michael Sean O'Connell, who on two occasions
during this period recommended, offered and caused to be
purchased for a customer's account illiquid Lerner-underwritten
REIT securities that were unsuitable for the customer, given the
customer's investment objectives and financial situation, in
violation of Section 17(a) of the Securities Act. Contrary to
the investment objective of his customer, who desired a
diversified investment for his limited savings in an IRA
account, O'Connell's recommendation concentrated the IRA account
in one illiquid REIT. As a result of O'Connell's unsuitable
investment recommendations, the customer sustained $6,518 in
losses.
The Order further finds that Lerner failed reasonably to
supervise Merl and O'Connell. Specifically, the Order finds that
Lerner did not have a system of supervision reasonably designed
to prevent and detect suitability violations by the registered
representatives and had no system of follow-up and review of red
flags, such as complaints of unauthorized transactions and
mismatches between recommendations for illiquid REIT investments
and customers seeking conservative, tax-exempt municipal bond
issues.
The Order also finds that Lerner violated Exchange Act Section
17(a)(1) and Rule 17a-3 thereunder by failing to make and keep
current, accurate books and records. Lerner's records with
respect to the aforementioned customers contained a customer
signature on a margin account form that was not authentic.
Lerner has paid $181,997 into escrow for distribution to the
customers who sustained losses resulting from Merl's and
O'Connell's unsuitable investment recommendations. In addition,
Lerner has undertaken to retain an independent reviewer to
review Lerner's existing procedures and issue recommendations on
procedures for the prevention of unsuitable investment
recommendations and the keeping of accurate books and records.
In view of the foregoing findings, the Commission ordered that
Lerner:
(1) be censured;
(2) cease-and-desist from committing or causing violations
and any future violations of Exchange Act Section
17(a)(1) and Rule 17a-3 thereunder;
(3) pay a $50,000 civil penalty; and
(4) comply with the aforementioned undertakings.
Merl's and O'Connell's unsuitable investment recommendations
described above also constituted violations of certain NASD
Conduct Rules. In a separate NASD proceeding, Merl and O'Connell
consented to the following sanctions: Merl was fined $52,000,
of which $42,000 represented disgorgement of commissions, and
suspended from associating with any NASD member firm in all
capacities for five months; and O'Connell was fined $10,000 and
suspended from associating with any NASD member firm in all
capacities for 30 days.
DIAMOND TRIUMPH: PA Customers Lodge Unfair Trade Practices Suit
---------------------------------------------------------------
Diamond Triumph Auto Glass, Inc. faces a class action filed in
the Court of Common Pleas of Luzerne County, Pennsylvania by
Delbert Rice and Kenneth E. Springfield, Jr., on behalf of
themselves and all others similarly situated.
Plaintiffs allege, among other things, the Company violated
certain sections of the Pennsylvania Unfair Trade Practices and
Consumer Protection Law and common law. Plaintiffs claim this
alleged conduct has caused them monetary damages. Among other
things, they are seeking damages in an amount to be determined
at trial.
DREAM ON: Recalls 20,000 Baby Walkers Because of Accident Hazard
----------------------------------------------------------------
Dream On Me Industries is cooperating with the U.S. Consumer
Product Safety Commission by voluntarily recalling about 20,000
Dream On Me Baby Walkers. The walkers will fit through a
standard doorway and are not designed to stop at the edge of a
step. Babies using these walkers can be seriously injured or
killed if they fall down stairs.
No injuries have been reported with the baby walkers. This
recall is being conducted to prevent the possibility of injury.
The recalled baby walkers have model number 408 or 423 written
on a label sewn into the seats. Model 408 has a white and black
tray and a black printed fabric base and seat, measuring about
25 inches by 28 inches. Model 423 has a red tray and a purple
plastic base measuring about 25 inches by 28 inches. Both models
have eight snap in wheels and a label sewn into the seat that
reads "DREAM ON ME IND INC. BROOKYN, NY 112321, MADE IN CHINA."
Small toy and juvenile product stores in the metropolitan New
York area sold these products from April 2002 through March 2004
for about $25 for model 408 and about $30 for model 423.
Consumers are advised to stop using the recalled walkers
immediately and return the walkers to the retailer where
purchased to receive a refund. For additional information on
returning the product, contact Dream On Me Industries
representatives by Phone: (877) 768-5500 between 9 a.m. and 5
p.m. ET Monday through Friday.
ELI LILLY: Gilman & Pastor Lodges Consumer Fraud Suit in E.D. NY
----------------------------------------------------------------
The law firm of Gilman and Pastor LLP initiated a nationwide
class action lawsuit in the US District Court, Eastern District
of New York on behalf of all persons in the US who purchased
Zyprexa, a drug manufactured by Eli Lilly and Co. Zyprexa is the
trade name for a prescription antipsychotic drug known as
Olanzapine, promoted and prescribed for the treatment of
schizophrenia and bipolar disorders.
Zyprexa has been linked to dangerous physical side effects, such
as diabetes mellitus, hyperglycemia, pancreatitis, ketoacidosis
and diabetic coma. Zyprexa side effects are considered such a
risk that in 2002, both the Japanese Health and Welfare Ministry
and the Great Britain Medicines Control Agency issued emergency
warnings concerning Zyprexa and diabetes-related complications.
In July 2002, Duke University conducted a study of Zyprexa based
upon the US Food and Drug Administration adverse drug reports
database. The study documented 289 reported cases of diabetes
from people using Zyprexa. Similarly, in Aug 2003, researchers
from the US Department of Veteran Affairs, Boston University and
University of Illinois at Chicago released findings from a study
on Zyprexa and other antipsychotic drugs that linked Zyprexa to
an increased risk of diabetes, especially among younger
patients.
It is reported that in 2002 alone, over 7.4 million
prescriptions for Zyprexa were written in the US, totaling over
$2.53 bn in sales. Zyprexa has been promoted for off-label uses
not approved by the FDA, such as depression and anxiety.
For more details, visit the following link:
http://www.gilmanpastor.com/Cases/case.asp?id=62
ENRON CORPORATION: SEC Files, Settles Fraud Charges V. Ex-Exec
--------------------------------------------------------------
The Securities and Exchange Commission charged Paula H. Rieker,
a former Managing Director for Investor Relations and Corporate
Secretary for Enron Corporation, with violating the antifraud
provisions of the federal securities laws.
Without admitting or denying the allegations of the complaint,
Ms. Rieker has agreed to be enjoined permanently from violating
and aiding and abetting the violation of Sections 10(b) of the
Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, and
to be barred from acting as an officer or director of a public
company.
As part of the settlement agreement, which is subject to the
approval of the U.S. District Court, Rieker will pay
disgorgement, prejudgment interest, and a civil penalty totaling
$499,333. The Commission brought this action in coordination
with the U.S. Department of Justice Enron Task Force, which
filed a related criminal charge against Rieker. Rieker agreed
to enter a guilty plea in connection with that charge and to
cooperate with the government's continuing investigation.
As alleged in the complaint, Rieker engaged in insider trading
in violation of the federal securities laws in July 2001 when
she traded on material inside information about significant
losses in Enron Broadband Services (EBS). The complaint also
alleges that Rieker violated the federal securities laws by
providing substantial assistance to Enron executives and senior
managers in the dissemination of false and misleading
information to the public about Enron business units in
analyst calls and earnings releases.
Specifically, the Commission's complaint alleges as follows.
(1) Aiding and Abetting Material Misrepresentations and
Omissions: In her role as Managing Director for
Investor Relations, Rieker was actively involved in the
compilation and drafting of Enron's first and second
quarter 2001 earnings releases, and scripts for Enron's
March 23, 2001, analyst call and the first and second
quarter 2001 analyst calls. During her efforts, Rieker
learned specific information about Enron's retail
energy business unit, Enron Energy Service (EES), and
about EBS revealing that EES and EBS were not the
successful business units described in the earnings
releases and scripts she compiled, and as described by
Enron in the analyst calls. Nevertheless, Rieker did
not correct the false and misleading information
provided to analysts and investors by Enron executives
and senior managers.
(2) Insider Trading: Rieker, in her role as an investor
relations official at Enron, learned that Enron's EBS
business unit was experiencing significant financial
problems and was experiencing losses greater than had
been previously disclosed to analysts and investors.
While in possession of this material non-public
information, Rieker sold Enron stock in advance of
Enron's public disclosure of EBS' true financial
picture and avoided losses.
The Commission's investigation is continuing. The suit is
styled "SEC v. Paula H. Rieker, Civil Action No. H-04-1994,
SDTX."
FAST FOOD LITIGATION: Proposed MO Laws To Blocks Obesity Suits
--------------------------------------------------------------
Missouri legislators are seeking final approval for a bill that
would protect food chain businesses in the state against
lawsuits blaming them for an individual's obesity or other
health problems, Health and Medicine Week reports.
The bill, called the "Commonsense Consumption Act," would bar
lawsuits for damages against restaurants, food manufacturers,
distributors, sellers or advertisers. The ratified law would
take effect next January 1 and would apply to future lawsuits as
well as any pending in Missouri courts on that date. Claims
arising from alcohol consumption are excluded from the bill's
restrictions.
According to Senator Chuck Gross, a bill sponsor, the Senate
voted 32-0 to send the bill, previously passed by the House, to
Governor Bob Holden. He also told Health and Medicine Week that
the bill was a pre-emptive strike and not a reaction to any
recent lawsuits.
IDAHO: ID Residents To Start Receiving Taxol Settlement Checks
--------------------------------------------------------------
Idaho Attorney General Lawrence Wasden announced the Taxol
settlement checks returning $84,015.00 to 139 Idaho consumers
will be mailed beginning Tuesday, June 1, 2004. A letter from
Attorney General Wasden explaining the payments will accompany
the checks. Idahoans who submitted claims for purchases of the
anticancer drug Taxol or its generic form paclitaxel (including
Onxol), will receive the refunds.
The settlement resolved an antitrust case in federal District
Court for the District of Columbia in which Attorney General
Wasden, joined the attorneys general of the other 49 states, the
District of Columbia and U.S. territories. The lawsuit alleged
that because of invalid patents claimed by Bristol-Myers Squibb
Company for its anticancer drug Taxol, lower cost generic
substitutes were delayed in arriving on the market. In November
2003 the federal district court approved a settlement negotiated
by the Attorneys General on behalf of consumers in all the
states and territories.
As a result of that settlement individuals who paid all or part
of the cost for treatments with Taxol or its generic equivalent
paclitaxel, during the period from January 1, 1999 through
February 28, 2003, and who submitted valid claims during the
court-established claims period ending February 29, 2004, will
receive reimbursement of at least $525. Consumers who paid the
entire cost for two or more treatments will be paid $438 for
each such treatment. Nationally, 12,723 consumers will recover
a total of $7,242,114.
"The delay of lower priced generic versions of the drug Taxol
was an unlawful anti-competitive practice. The unlawful acts
forced many Idahoans to pay more for chemotherapy treatments,"
Attorney General Wasden said. "I am pleased that Idahoans who
purchased these drugs will receive reimbursement for the higher
prices they had to pay as a result of Bristol-Myers Squibb's
conduct."
Taxol and Onxol are used to treat breast and ovarian cancers in
their late stages. The drugs are also sometimes used to treat
lung cancer and certain cancers caused by AIDS, such as Kaposi's
Sarcoma. In addition to settling consumer claims, Bristol-Myers
Squibb agreed to reimburse the state of Idaho $108,000 to settle
the state's claims against the company.
LOUDEYE CORPORATION: NY Suit Settlement To Be Completed in June
---------------------------------------------------------------
The settlement proposed by Loudeye Corporation for the
securities class action filed against it in the United States
District Court for the Southern District of New York is due to
be completed in June 2004.
The suit names as defendants the Company and certain of its
former officers and directors, as well as certain underwriters
who handled its initial public offering of common stock in March
2000. The suit was filed on behalf of a class of persons who
purchased the Company's common stock during the time period
beginning on March 15, 2000 and ending on December 6, 2000.
The suit alleges violations of the Securities Act of 1933 and
the Securities Exchange Act of 1934, primarily based on the
allegation that there was undisclosed compensation received by
the Company's underwriters in connection with its initial public
offering and the allegation that the underwriters entered into
undisclosed arrangements with some investors that were designed
to distort and/or inflate the market price for the Company's
common stock in the aftermarket following the initial public
offering. No specific amount of damages has been claimed.
The Company and the individual defendants have demanded to be
indemnified by the underwriter defendants pursuant to the
underwriting agreement entered into at the time of the initial
public offering. Presently, all claims against the former
officers have been withdrawn without prejudice. The Company,
along with the other issuer defendants, moved to dismiss the
claims in the complaint.
In February 2003, the court denied the Company's motion. A
proposed settlement and release of claims against the issuer
defendants was approved by the court and is scheduled to be
completed in June 2004.
MAZDA NORTH: Recalls 106,000 Tribute SUVs Due To Crash Hazard
-------------------------------------------------------------
In April 2004, Mazda North American Operations recalled 106,000
Mazda Tribute sport utility vehicles, model 2001 to 2003,
manufactured from April 2000 to September 2002.
On certain sport utility vehicles equipped with 3.0L V6 Duratec
engines, during deceleration at vehicle speeds below 40 mph, the
engine may stall, possibly resulting in a vehicle crash.
Dealers will reprogram the Powertrain Control Module. The
manufacturer reported that owner notification began on May 3,
2004. Owners may contact Mazda at 1-800-222-5500.
METROPOLITAN MARKET: Expands Raw Almond Recall Due To Salmonella
----------------------------------------------------------------
Metropolitan Market is expanding its voluntary recall on its
distribution of raw whole (or diced) almonds packaged as Almonds
Whole Raw due to the possibility of contamination with
Salmonella Enteritidis. The recalled almonds are packed in 8 oz.
or 16 oz. clear, square clam shell containers packaged under the
Metropolitan Market White Scale Label, with the code of PLU #
4248 and "SELL BY" dates Feb. 01.04 through Aug. 29.04.
Salmonella is an organism, which can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weakened immune systems. Healthy persons infected
with Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e, infected aneurysms),
endocarditis and arthritis.
The expanded recall covers product that was distributed or sold
through the Admiral Metropolitan Market in West Seattle.
This recall is in follow-up to a voluntary recall announced in
mid-May by Paramount Farms of California of whole and diced raw
almonds based on over 20 possible cases of illnesses associated
with the almonds. The cases were reported in California,
Arizona, Oregon, Washington, Utah, New Mexico, Arkansas,
Tennessee, Massachusetts and Michigan. The Company is working
with FDA to assure that all potentially contaminated almonds are
removed from the marketplace and that consumers are notified of
the recall.
The raw almonds should not be consumed but rather returned to
the store of purchase for a full refund. For further
information, call: Admiral Metropolitan Market, 206.937.0551,
open 24 hours a day.
NEW ACCESS: TX A.G. Abbot Joins Consumer Complaint Settlement
-------------------------------------------------------------
Texas Attorney General Greg Abbott has joined in an agreement
with nine other states to ensure that Minnesota-based New Access
Communications L.L.C. will give accurate information to
prospective customers. The company, a reseller of local and
long-distance, routinely invited new customers to New Access
with promises of substantial savings over their previous
telecommunications providers.
In actuality, the company's telemarketers did not disclose
numerous fees, including intrastate long distance charges billed
at higher per-minute rates, regulatory fees, and fees for
retaining consumers' pre-existing features such as call-waiting.
The company also did not obtain consumers' consent before
switching them to New Access.
"This settlement will put into play a number of reforms with
which the company must comply, including refunds to customers
who were deceived by this scheme," said Attorney General Abbott
in a statement.
Consumers who have filed a complaint about the company's
practices or who file complaints within 90 days will be eligible
for credits or refunds. New Access will credit back overcharges
on customer phone bills and create a trust fund of at least
$250,000 for restitution to consumers who file complaints. The
company will allocate $750,000 to the 10 states for attorneys'
fees and costs.
The agreement prohibits New Access from telling consumers it is
affiliated with their current carriers, that their carriers have
gone out of business or that consumers are required to switch to
New Access. The company also must not switch consumers to its
service without their consent.
New Access must provide a toll-free customer service telephone
number connecting to a live person for all new customers. The
customer service representative must clearly communicate the
services the company offers and that certain fees above the base
price will be charged for extra services. Other participating
states are Colorado, Ohio, Michigan, Minnesota, Montana,
Nebraska, North Dakota, Iowa and Wisconsin.
NEWKIRK MASTER: CT Court Approves Investor Fraud Suit Settlement
----------------------------------------------------------------
The Connecticut Superior Court approved the settlement for the
class action filed against Newkirk Master LP's general partner
and various affiliates of the general partner.
Plaintiffs are four limited partners of three of the Newkirk
Partnerships. The action was filed in connection with the
transaction involving the merger into wholly-owned subsidiaries
of the Partnership of 90 limited partnerships (the "Newkirk
Partnerships"), each of which owned commercial properties (the
"Newkirk properties"), and the acquisition by the Partnership of
various assets, including those related to the management or
capital structure of the Newkirk Partnerships.
The suit alleges, among other things, that the price paid to
non-accredited investors in the exchange was unfair and did not
fairly compensate them for the value of their partnership
interests. The complaint also alleges that:
(1) the exchange values assigned in the Exchange to certain
assets contributed by affiliates of the Partnership's
general partner were too high in comparison to the
exchange values assigned to the Newkirk Partnerships,
(2) the option arrangement relating to the Partnership's
potential acquisition in the future of the T-2
Certificate, which represents an interest in a grantor
trust, the mortgage assets of which consist of contract
rights secured by the Partnership's real properties as
well as other properties owned by other partnerships
that are controlled by affiliates of the Partnership's
general partner, was unfair to limited partners and
(3) that the disclosure document used in connection with
the Exchange contained various misrepresentations
and/or omissions of material facts.
The complaint seeks to have the action classified as a class
action as well as compensatory and punitive damages in an
unspecified amount. The defendants have denied and continue to
deny the allegations of the complaint.
In order to avoid the expenses, distraction, and uncertainties
of litigation, the defendants entered into a settlement
agreement dated December 31, 2003 to settle the litigation,
which settlement agreement was subject to court approval. On
April 16, 2004, after notice to the purported class members and
a hearing on whether to approve the settlement, the Court
approved the settlement, the payment of plaintiffs' attorneys'
fees and costs from the settlement proceeds, payment of
incentive fees to certain named plaintiffs from the settlement
proceeds, and a plan of allocation of the settlement proceeds
submitted by plaintiffs' counsel.
The settlement provides for the following material terms:
(i) the Newkirk Group will convey to unitholders of the
Newkirk Partnerships who are unaffiliated with the
general partner and who received limited partnership
units in the Exchange, units in the Partnership equal
to 1% of the outstanding units;
(ii) the Partnership will pay $1.5 million to an escrow
agent for the benefit of unaffiliated unitholders; and
(iii) the Partnership will pay $2.0 million to an escrow
agent for the benefit of unitholders of the Newkirk
Partnerships who were entitled to receive cash in the
Exchange.
In addition, the Partnership, in order to facilitate the
settlement, entered into an agreement with T-Two Partners and
its equityholders pursuant to which the Partnership has the
right to acquire substantially all of the assets of T-Two
Partners or a 100% ownership interest in T-Two Partners at any
time between November 24, 2006 and November 24, 2009.
NEWKIRK MASTER: Affiliates Reach Settlement For Derivative Suit
---------------------------------------------------------------
A settlement has been reached for the derivative action filed in
the Dallas County Texas District Court by a limited partner of
Eastgar Associates, L.P. against, among others, the general
partners of Eastgar and affiliates of the Newkirk Partnerships.
The Partnership owns a 60.5% limited partnership interest in
Eastgar and also controls the general partner of that
partnership. The complaint alleges that the defendants have
charged Eastgar excessive management fees and have unfairly
prevented Eastgar from prepaying and refinancing its mortgage
indebtedness. The complaint seeks compensatory and punitive
damages in an unspecified amount, attorneys' fees and expenses,
an accounting, and a declaration of the parties' future rights
and obligations regarding management fees and the refinancing of
mortgage indebtedness.
The defendants have denied and continue to deny the allegations
of the complaint. In order to avoid the expenses, distraction
and uncertainties of litigation, the defendants entered into an
agreement to settle the litigation for a $137,500 payment by the
defendants and to charge an asset management fee of $35,000 per
year, adjusted for changes in the Consumer Price Index and as
may be adjusted for extraordinary circumstances by Eastgar's
general partner.
After payment of court-approved attorneys' fees and expenses,
the remaining balance would be distributed to Eastgar's limited
partners other than the Partnership or its affiliates. The
settlement also sets the management fees to be charged to
Eastgar, subject to any changes that Eastgar may approve in the
future consistent with its fiduciary duty. The settlement has
been, as required, approved by the trial court after notice to
the limited partners of Eastgar. The Partnership accrued
$137,500 with respect to this matter, which is included in
general and administrative expense in the consolidated statement
of operations for the year ended December 31, 2003.
NISSAN NORTH: Recalls 26,000 Minivans Due To Door Latch Defect
--------------------------------------------------------------
In April 2004, Nissan North America, Inc. recalled 26,000 Nissan
Quest minivans, model 2004, manufactured from March to December
2003.
On certain minivans equipped with power sliding doors, at an
ambient temperature below approximately 40 degrees Fahrenheit,
the actuator for the power sliding doors may bind due to an out-
of-specification condition. In order to open, close or reverse a
power sliding door, the shift selector lever must be in "Park."
If the actuator is experiencing binding and the driver shifts
the vehicle out of "Park" while a power sliding door is still
closing, the door latches may not engage. This can result in the
door coming open unexpectedly upon rapid acceleration and an
occupant could fall out of the door and be injured.
Dealers will replace the actuator for the power sliding doors.
The manufacturer has reported that owner notification is
expected to begin during May 2004. Owners may contact Nissan at
1-800-647-7261.
OCCAM NETWORKS: CA Court Tentatively Approves Lawsuit Settlement
----------------------------------------------------------------
The United States District Court for the Central District of
California granted preliminary approval to the settlement of the
securities class action filed against Occam Networks, Inc. and
certain of its current and former officers and directors.
The suit is pending under the Honorable Judge Ronald S. W. Lew
as "In Re Accelerated Networks Securities Litigation." The
amended complaint generally alleges that the defendants made
materially false and/or misleading statements regarding the
Company's financial condition and prospects during the period of
June 22, 2000 through April 17, 2001 in violation of Sections
10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of
1934 and that the registration statement and prospectus issued
by defendants in connection with the Company's June 23, 2000
initial public offering contained untrue statements of material
fact and omitted to state material facts in violation of
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933.
The Company previously filed two motions to dismiss the
plaintiffs' amended complaints. The plaintiffs opposed the
motions and a hearing on each motion took place. At both
hearings, the Court granted the motion as to the plaintiffs'
1934 Act claims, and denied the motion as to plaintiffs' 1933
Act claims.
In each instance the plaintiffs were given 30 days' leave to
amend their 1934 Act claims. The plaintiffs filed their third
amended complaint and the Company filed a motion to dismiss the
third amended complaint. The plaintiffs opposed the motion and
a hearing took place on February 3, 2003. At that hearing, the
Court denied the motion to dismiss the 1934 Act claims.
Subsequently, the parties agreed to enter into mediation that
occurred on October 1, 2003. At the mediation the parties and
the Company's insurance carrier reached a tentative settlement
that is subject to Court and shareholder class approval. The
members of the shareholder class have approved the settlement
and the Court preliminarily approved the settlement on April 20,
2004. The Company anticipates final approval by June 30, 2004.
OCCAM NETWORKS: To Execute NY Settlement Documents by September
---------------------------------------------------------------
Occam Networks, Inc. expects to execute documents for the
settlement of the securities class action filed against it in
the United States District Court for the Southern District of
New York on or before September 30, 2004.
In June 2001, three putative stockholder class action lawsuits
were filed against the Company (then operating as Accelerated
Networks, Inc.), certain of its then officers and directors and
several investment banks that were underwriters of Accelerated
Networks' initial public offering. The cases were later
consolidated.
The Court appointed a lead plaintiff on April 16, 2002, and
plaintiffs filed a Consolidated Complaint on April 19, 2002.
The Complaint was filed on behalf of investors who purchased
Accelerated Networks' stock between June 22, 2000 and December
6, 2000 and alleges violations of Sections 11 and 15 of the 1933
Act and Sections 10(b) and 20(a) and Rule 10b-5 of the 1934 Act
against one or both of Accelerated Networks and the individual
defendants.
The claims are based on allegations that the underwriter
defendants agreed to allocate stock in Accelerated Networks'
initial public offering to certain investors in exchange for
excessive and undisclosed commissions and agreements by those
investors to make additional purchases in the aftermarket at
pre-determined prices. Plaintiffs allege that the prospectus
for Accelerated Networks' initial public offering was false
and misleading in violation of the securities laws because it
did not disclose these arrangements.
These lawsuits are part of the massive "IPO allocation"
litigation involving the conduct of underwriters in allocating
shares of successful initial public offerings. The Company
believes that over three hundred other companies have been named
in more than one thousand similar lawsuits that have been filed
by some of the same plaintiffs' law firms.
In October 2002 the plaintiffs voluntarily dismissed the
individual defendants without prejudice. On February 19, 2003 a
motion to dismiss filed by the issuer defendants was heard and
the court dismissed the 10(b), 20(a) and Rule 10b-5 claims
against the Company. On July 31, 2003, the Company agreed,
together with over three hundred other companies similarly
situated, to settle with the Plaintiffs.
A Memorandum of Understanding (MOU), along with a separate
agreement and a performance bond of $1 billion issued by the
insurers, for these companies' guarantees, allocated pro rata
amongst all issuer companies, to the plaintiffs as part of an
overall recovery against all defendants including the
underwriter defendants who are not a signatory to the MOU. Any
recovery by the plaintiffs against the underwriter defendants
reduces the amount to be paid by the issuer companies.
The settlement documents are in process and it is anticipated
that the Company will execute the settlement documents on or
before September 30, 2004. The settlement must be approved
by the members of the class of plaintiffs and by the Court.
ONESOURCE INFORMATION: Faces Two Shareholder Suits in DE Court
--------------------------------------------------------------
OneSource Information Services, Inc. and its directors face two
purported class actions filed in the Delaware Court of Chancery,
entitled "Hoffacker v. OneSource Information Services, Inc., et
al., Filing ID No.3140593," and "Pennsylvania Avenue Funds v.
Kamin, et al., Filing ID No. 3141683," respectively.
The complaints allege, among other things, that the defendants
breached their fiduciary duties in entering into the proposed
transaction with affiliates of ValueAct Capital. The complaints
seek unspecified damages and injunctive relief.
PAYLESS SHOESOURCE: Recalls 441T Baby Shoes For Choking Hazard
--------------------------------------------------------------
Payless ShoeSource, Inc. is cooperating with the U.S. Consumer
Product Safety Commission by voluntarily recalling about 441,000
Smart Fit(tm) and Teeny Toes(tm) Athletic Shoes. The metal
eyelet lace holder at the top of the shoes can detach, posing a
choking hazard to young children.
Payless ShoeSource has received one report of a child starting
to choke on a detached eyelet from one of these shoes. No
injuries have been reported.
These are children's athletic shoes in prewalk and toddler
sizes. The shoes are white with different color trim and come
in sizes 0 to 10. The brand name "Smart Fit" or "Teeny Toes" is
written on the sole and insole of the shoes. The recalled shoes
have one of the following five-digit numbers, found on a label
on the bottom of the shoe tongue: 31056, 31057, 31219, 32264,
32265, 33060 and 33061. No other styles or models are included
in this recall.
Payless ShoeSource stores and Web site sold these items
nationwide from December 2003 through April 2004 for about $10.
Consumers should take the recalled shoes away from young
children immediately and should return the shoes to a Payless
ShoeSource store for a cash refund or exchange. For more
information, call Payless toll-free at (800) 654-0697 between
7:30 a.m. and 7 p.m. CT Monday through Saturday, and between
9:30 a.m. and 6 p.m. Sunday, or visit their Web site:
http://www.payless.com.
POLARIS INDUSTRIES: Recalls 3,230 Motorcycles For Brake Defect
--------------------------------------------------------------
In April 2004, Polaris Industries, Inc. recalled 3,230
motorcycles, namely models:
(1) Victory Vegas, model 2004
(2) Victory ANSS Vegas, model 2004
(3) Victory Kingpin, model 2004
These motorcycles were manufactured from May 2003 to April 2004.
On certain motorcycles, the hose that connects the rear brake
fluid reservoir to the rear brake master cylinder may have
become damaged during shipment and may leak brake fluid, which
can cause a loss of rear braking capability, increasing the risk
of a crash.
Dealers will inspect the rear brake reservoir hose and if the
hose is damaged, replace it. The manufacturer has reported that
owner notification began on April 26, 2004. Owners may contact
Polaris/Victory at 1-763-417-8650.
RITE AID: SEC Reaches Settlement With CFO in PA Fraud Lawsuit
-------------------------------------------------------------
The Securities and Exchange Commission reached a settlement with
former Rite Aid Corporation CFO Frank M. Bergonzi, over the
accounting fraud charges it filed in the United States District
Court in the Middle District of Pennsylvania.
The suit named Mr. Bergonzi and two other former senior
executives of Rite Aid, the nationwide drug store chain based in
Harrisburg, Pennsylvania. The Commission submitted the
judgment, to which Mr. Bergonzi consented without admitting or
denying the allegations in the Commission's complaint, to the
Hon. J. Rambo.
The Commission's case has been stayed pending the outcome of the
related criminal actions against Bergonzi and others. Bergonzi,
who pled guilty to criminal charges involving his conduct while
at Rite Aid in a case filed by the United States Attorney for
the Middle District of Pennsylvania, was sentenced earlier today
in connection to significant criminal sanctions.
In its civil action, the Commission charged that Bergonzi,
Martin L. Grass, Rite Aid's former CEO, and Franklin C. Brown,
the former vice chairman and chief legal officer, were
responsible for one of the most egregious accounting frauds in
recent history. The Commission alleged that Bergonzi and the
others conducted a wide-ranging accounting fraud scheme that
resulted in the significant inflation of Rite Aid's net
income in every quarter from May 1997 to May 1999. After the
discovery of improper and unsubstantiated accounting
transactions, in July and October 2000 Rite Aid restated
cumulative pretax income by a massive $2.3 billion dollars and
cumulative net income by $1.6 billion dollars. Rite Aid's
restatement was, at the time, by far the largest financial
restatement ever by a public company. The Commission's
subsequent investigation into the reasons for the restatement
culminated in its charges against Bergonzi and the others.
The judgment would order Bergonzi to be barred from acting as an
officer or director of a public company. In addition, Bergonzi
would be permanently enjoined from future violations of the
antifraud, reporting, books and records, internal controls, and
other provisions of the Securities Act of 1933 and the
Securities Exchange Act of 1934, specifically Section 17(a) of
the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange
Act, and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and, as a
controlling person pursuant to Section 20(a) of the Exchange
Act, Sections 13(a) and 13(b)(2) of the Exchange Act and Rules
12b-20, 13a-1 and 13a-13. Bergonzi would not be ordered to pay
civil penalties, and disgorgement of $299,774.00 plus
prejudgment interest of $199,066.70 would be waived, based on
his financial condition.
The suit is styled "SEC v. Frank M. Bergonzi, Martin L. Grass,
and Franklin C. Brown, No. 1:CV02-1084, MDPA."
ROYAL CANDY: Recalls Raw Almonds Due To Salmonella Contamination
----------------------------------------------------------------
Royal Candy &. Nut Co. is conducting a voluntary recall on its
distribution of raw whole almonds and California mix packaged as
Royal Candy products due to the possibility of contamination
with Salmonella enteritidis. The recalled almonds are packed in
1 oz. packages and California mix in 2.1 oz packages under Royal
Candy & Nut, Co. label, with product codes of 0305 and 0904.
Salmonella is an organism which can cause serious and sometimes
fatal infections in young children, frail or elderly people, and
others with weakened immune systems. Healthy persons infected
with Salmonella often experience fever, diarrhea (which may be
bloody), nausea, vomiting and abdominal pain. In rare
circumstances, infection with Salmonella can result in the
organism getting into the bloodstream and producing more severe
illnesses such as arterial infections (i.e. infected aneurysms),
endocarditis and arthritis.
Royal Candy & Nut, Co. distributes this product in Illinois and
Indiana. This recall is in follow up to a voluntary recall
announced in mid-May by Paramount Farms of California of whole
and diced raw almonds based on over 20 possible cases of
illnesses associated with the almonds. The cases were reported
in California, Arizona, Oregon, Washington, Utah, New Mexico,
Arkansas, Tennessee, Massachusetts and Michigan. We are working
with FDA to assure that all potentially contaminated almonds are
removed from the marketplace and that consumers are notified of
the recall.
The raw almonds and California mix should not be consumed but
rather returned to Royal Candy & Nut Co. for a full refund. For
further information, call Royal Candy & Nut Co., (773) 843-1905
between 7:00 a.m. and 3:30 p.m.
SHOE PAVILION: CA Court Approves Tentative Overtime Lawsuit Pact
----------------------------------------------------------------
The Los Angeles County Superior Court granted preliminary
approval to the settlement proposed for the class action filed
against Shoe Pavilion, Inc. by one of its store managers who
asserted that he and all other store managers in California were
improperly classified as "exempt" employees under California's
wage and hour laws and therefore are entitled to overtime wages.
An amended complaint seeking class action status on behalf of
all store managers in California was subsequently filed with the
court.
The Company denied the plaintiff's claims and filed an answer
challenging class certification. In December 2003, the Company
entered into a settlement agreement. Under the terms of the
agreement, which must be approved by the court, the Company
would pay store managers a stipulated cash settlement based upon
the number of weeks worked for the period from April 1, 1998
through December 31, 2003. The court granted preliminary
approval on April 16, 2004, however the agreement is still
subject to final court approval.
TOYOTA MOTOR: Recalls Highlander SUVs Due To Defective CPL Lever
----------------------------------------------------------------
In April 2004, Toyota Motor North America, Inc. recalled 366,572
Toyota Highlander sport utility vehicles, model 2001 to 2004,
manufactured from November 2000 to January 2004.
Dealers will modify the CPL lever. The manufacturer has reported
that owner notification is expected to begin during May or June
2004. Owners may contact Toyota at 1-800-331-4331.
TRIUMPH MOTOR: Recalls 18,998 Motorcycles For Defect, Fire Risk
---------------------------------------------------------------
In April 2004, Triumph Motorcycles (America) Ltd. recalled
18,998 motorcycles, models:
(1) Triumph Daytona 955, model 1997-2004
(2) Triumph Daytona T595, model 1997-2004
(3) Triumph Speed Triple, model 1997-2004
(4) Triumph Speed Four, model 2002-2004
(5) Triumph Sprint RS, model 2000-2004
(6) Triumph Sprint ST, model 1999-2004
(7) Triumph Tiger, model 1999-2004
(8) Triumph TT600, model 2000-2003
(9) Triumph Daytona 600, model 2004
These motorcycles were manufactured from June 1996 to September
2003. On certain motorcycles, the fuel connector linking each
of the feed and return fuel hoses to the fuel pump mounting
plate may fracture following in-service handling. Fuel could
escape from the fractured body of the connector onto the engine
or side of the bike. Fuel leakage in the presence of an ignition
source could result in a fire.
Dealers will replace the connector. The manufacturer has
reported that owner notification is expected to begin during May
2004. Owners may contact Triumph at 1-678-854-2010.
UNITED HEALTHCARE: Faces Unfair Trade Practices Suit in NC Court
----------------------------------------------------------------
United Healthcare faces a class action filed by the North
Carolina Medical Society, a physician's advocacy group, alleging
that the health care system made deceptive, unfair and unlawful
business practices, which harmed doctors, Health & Medicine Week
reports.
The class action asks for a Wake County Superior Court ruling
that will force United Healthcare "to change unfair business
practices that deny and delay payments for medical care." It
does not seek monetary damages. Other allegations in the suit
include the nonpayment of claims dating as far back as 3 years,
coding errors, denial of coverage for services deemed medically
necessary, poor communication efforts and bad faith in contract
negotiations.
In a news release announcing the filing, the society said it
reasoned with United Healthcare executives on January 8 in
Greensboro and at in Minneapolis to discuss its members'
concerns, but their request were ignored by the company. The
organization, which represents around 12,000 physicians and
physician assistants practicing in North Carolina, had announced
that it would sue United on April for ignoring them.
VERIZON WIRELESS: CA Court Approves Consumer Lawsuit Settlement
---------------------------------------------------------------
San Diego Superior Court Judge William Pate approved a
settlement of a class action that accuses Verizon Wireless of
failing to disclose billing practices and service restrictions
for millions of customers, according to Howard Finkelstein, the
plaintiffs' lead lawyer, AP Online reports. Attorneys say it's
unclear exactly how many people might be covered by the
settlement but conservative estimates are about 40 million.
As part of the settlement, the Company will give current and
former customers two vouchers. One offers a choice of up to $30
off a new or renewed contract, a $24 credit on an existing
contract, 1,500 text messages over six months, $15 off Verizon
merchandise, or a 120-minute long-distance calling card. The
second voucher would give consumers a hands-free "earbud"
headset or $15 off a similar Verizon accessory.
VERTICALNET INC.: NY Court to Review Suit Settlement Early 2004
---------------------------------------------------------------
VerticalNet, Inc. expects the United States District Court for
the Southern District of New York to review the proposed
settlement for the securities class action filed against it and
several of its officers and directors early this year. The suit
also names as defendants four underwriters involved in the
issuance and initial public offering of the Company's common
stock in February 1999:
(1) Lehman Brothers Inc.,
(2) Hambrecht & Quist LLC,
(3) Volpe Brown Whelan & Company LLC, and
(4) WIT Capital Corporation
The complaint alleges violations of Sections 11 and 15 of the
Securities Act of 1933 and Section 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated there under,
based on, among other things, claims that the four underwriters
awarded material portions of the initial shares to certain
favored customers in exchange for excessive commissions.
The plaintiff also asserts that the underwriters engaged in a
practice known as "laddering," whereby the clients or customers
agreed that in exchange for IPO shares they would purchase
additional shares at progressively higher prices after the IPO.
With respect to the Company, the complaint alleges that the
Company and its officers and directors failed to disclose in the
prospectus and the registration statement the existence of these
purported excessive commissions and laddering agreements. The
suit also alleges that the Company and its officers and
directors also violated Sections 10(b), 20(a), and Rule 10b-5 of
the Exchange Act in connection with the IPO.
In addition to this amended and consolidated complaint, the
plaintiffs in this lawsuit and in the hundreds of other similar
suits filed against other companies in connection with IPOs that
occurred in the late 1990s have filed "master allegations" that
primarily focus on the conduct of the underwriters of the IPOs,
including the Company's IPO.
On October 9, 2002, the Court entered an order dismissing,
without prejudice, the claims against the individual Verticalnet
officers and directors who had been named as defendants in the
various complaints. In February 2003, the District Court
entered an order denying a motion made by the defendants to
dismiss the actions in their entirety, but granting the motion
as to certain of the claims against some defendants. However
the Court did not dismiss any claims against the Company.
On June 5, 2003, the Company's counsel, with the approval of the
Company's directors, executed a Memorandum of Understanding on
behalf of Verticalnet with respect to a proposed settlement of
the plaintiff’s claims against Verticalnet. This proposed
resolution of the litigation has been publicly announced
(although not yet formally accepted by the plaintiffs) and
widely reported in the press. The proposed settlement, if
approved by the District Court, would result in, among other
things, the dismissal of all claims against the Company, its
officers, and directors. It is expected that the proposed
resolution will be reviewed by the Court in early 2004. Under
the present terms of the proposed settlement described above,
the Company would also assign its claims against the
underwriters to the plaintiffs in the consolidated actions.
WARREN ASSET: SEC Files, Settles Civil Securities Fraud Lawsuit
---------------------------------------------------------------
The Securities and Exchange Commission filed a settled civil
action in U.S. District Court for the Northern District of Texas
in Dallas against Warren Asset Management, LLC (WAM), a
Commission-registered investment adviser, its sole owner and
manager, Weldon R. Warren, and Warren's private investment fund,
DG Private Investment Fund, LLC (DGPIF). WAM, Warren and DGPIF
(defendants) agreed to be enjoined from violating the
federal securities laws' antifraud and record-keeping
provisions.
In the civil action, the Commission alleges that the defendants
misled clients about their investment performance record, failed
to properly disclose a fee increase for DGPIF, placed the funds
of their clients, some of whom are elderly and unsophisticated,
in highly leveraged investments without disclosing many of the
associated risks, and failed to maintain and provide to their
clients a wide assortment of required records. The Commission
also alleges that Warren failed to comply with the Commission's
examination process, by refusing to respond to the staff's
requests for information and documentation. Finally, the
Commission alleges that WAM is no longer eligible to be a
Commission-registered investment adviser.
The suit is styled "SEC v. Warren Asset Management,LLC, DG
Private Investment Fund, LLC and Weldon R. Warren individually
and d/b/a Dynamic Financial Management, Civil Action No. 3:04-
CV-1038-R, USDC/NDTX."
Asbestos Alert
ASBESTOS LITIGATION: ALSTOM Faces 2,090 Sickness Declarations
-------------------------------------------------------------
As of April 30, 2004, in France, ALSTOM (the Group) is aware of
around 2,090 asbestos sickness related declarations accepted by
the French Social Security authorities in France concerning the
Group's employees, former employees or third parties, arising
out of the Group's activities in France. All of such cases are
treated under the French Social Security system, which pays the
medical and other costs of those who are sick and which pays a
lump sum indemnity. Out of these 2,090 declarations, the Group
is aware of around 207 asbestos-related cases in France from
employees or former employees. They have instituted judicial
proceedings against certain of the Group's subsidiaries with the
aim of obtaining a court decision holding these subsidiaries
liable for an inexcusable fault which would allow them to obtain
a supplementary compensation above the payments made by the
French Social Security funds of related medical costs. All
decisions rendered as of today by the Social Security Affairs
Courts in proceedings involving the Group's subsidiaries have
found these subsidiaries liable on the grounds of inexcusable
fault. Decisions of the Courts of Appeal have all confirmed
these findings of inexcusable fault.
In March 2004, the French Supreme Court rendered its first
decisions on the appeals lodged by a subsidiary of the Group's
Marine Sector. The French Supreme Court has confirmed the
inexcusable fault, but has reversed the Court of Appeal's
decisions, which had ordered the Group's subsidiary to pay
damages as the damages are to be directly compensated by the
Social Security funds.
In May 2004, the French Supreme Court confirmed the finding of
inexcusable fault in six decisions rendered in relation to cases
in the Group's Marine Sector, while confirming that the damages
were to be definitively borne by the Social Security funds. In
the current cases within the Group's Marine Sector, the Social
Security authorities have not in fact attempted to charge the
Group subsidiary the financial consequences of occupational
disease, including those arising out of the inexcusable fault
pursuant to article 2 paragraph 2 of the decree of October 16,
1995. In the Group's other Sectors, the Group estimates that
most of the Group's current cases will be governed by the same
terms, pursuant to the above-mentioned decree.
The Group therefore believes that the lawsuits in France will
not have material adverse consequences on the Group financial
position. The compensation for most of the current 207
proceedings has been and is expected to continue to be borne by
the general French Social Security (medical) funds. Based on
applicable legislation and current case law, the Group also
believes that the financial consequences of any subrogatory
action of the publicly funded Indemnification Fund for Asbestos
Victims (FIVA), created in 2001, in relation to proceedings
referred to above, will be borne by the general French Social
Security (medical) funds. The Group also believes that those
cases where compensation may not be definitively borne by the
general French Social Security (medical) funds or by the FIVA
represent an immaterial exposure for which the Group has not
made any provisions.
In addition to the foregoing, in the United States, as of May
15, 2004, the Group was subject to around 155 asbestos-related
personal injury lawsuits, which have their origin solely in the
Company's purchase of some of the power generation business of
ABB ALSTOM Power, for which the Group is indemnified by ABB.
The Group is also currently subject to two class action lawsuits
in the United States asserting fraudulent conveyance claims
against various ALSTOM and ABB entities in relation to
Combustion Engineering, Inc. (CE), for which the Group has
asserted indemnification against ABB. CE is a U.S. subsidiary
of ABB, and its power activities were part of the power
generation business purchased by the Group from ABB. In January
2003, CE filed a "pre-packaged" plan of reorganization in U.S.
bankruptcy court. The bankruptcy court and the U.S. federal
district court confirmed this plan. The plan has been appealed
and has not yet become effective; consummation of the plan is
subject to certain other conditions specified therein. In
addition to its protection under the ABB indemnity, ALSTOM
believes that under the terms of the plan it would be protected
against pending and future personal injury asbestos claims, or
fraudulent conveyance claims, arising out of the past operations
of CE.
As of May 15, 2004, the Group was subject to around 32 other
asbestos-related personal injury lawsuits in the U.S. involving
around 507 claimants that, in whole or in part, assert claims
against ALSTOM which are not related to ALSTOM's purchase of
some of ABB's power generation business or as to which the
complaint does not provide details sufficient to permit the
Group to determine whether the ABB indemnity applies. Most of
these lawsuits are in the preliminary stages of the litigation
process and they each involve multiple defendants. The
allegations in these lawsuits are often very general and
difficult to evaluate at preliminary stages in the litigation
process. In those cases where ALSTOM's defense has not been
assumed by a third party and meaningful evaluation is
practicable, the Group believes that it has valid defenses and,
with respect to a number of lawsuits, the Group is asserting
rights to indemnification against a third party.
The Group has not in recent years suffered any adverse judgment,
or made any settlement payment, in respect of any US personal
injury asbestos claim. Between October 31, 2002 and May 15,
2004, a total of 171 cases involving around 17,724 claimants
were voluntarily dismissed by plaintiffs, typically without
prejudice (which is to say the plaintiffs may re-file these
cases in the future).
For purposes of discussion of U.S. asbestos-related cases, the
Group considers a claim to have been dismissed, and to no longer
be pending against it, if the plaintiffs' attorneys have
executed a notice or stipulation of dismissal or non-suit, or
other similar document.
The Group is also subject to asbestos-related or other employee
personal injury related claims in other countries, including in
the UK. As of March 31, 2004, the Group is subject to around
150 asbestos-related claims currently ongoing in the UK. The
Group retains provisions of EUR3,000,000 in relation to these
claims.
ASBESTOS LITIGATION: CSK Auto Explains Reserve Accrual
------------------------------------------------------
CSK Auto Corp., CSK Auto Inc. and their subsidiaries currently
and from time to time face complaints or litigation incidental
to the conduct of their business, including asbestos and similar
product liability claims. In some cases, the damages claimed
against the Company are substantial.
Based on internal review, the Company accrues reserves using its
best estimate of the probable and reasonably estimable
contingent liabilities. Although CSK maintains liability
insurance for some litigation claims, if one or more of the
claims greatly exceeds coverage limits, or the Company's
insurance policies do not cover a claim, it could have a
material adverse effect on CSK's business and operating results.
ASBESTOS LITIGATION: CSR Ltd. Named In 638 Employees' Claims
------------------------------------------------------------
CSR Ltd. and/or certain subsidiaries were involved in mining
asbestos and manufacturing and marketing products containing
asbestos in Australia, and exporting asbestos to the United
States. As a result of these activities, CSR has been named as
a defendant in litigation in Australia and the United States.
In Australia, claims for asbestos induced injury have been made
by employees and ex-employees of CSR, by others such as
contractors and transporters and by users of products containing
asbestos. At 31 March 2004, there were 638 such claims pending.
In the United States, claims for damages are being made by
people who allege exposure to asbestos fiber liberated either
during the manufacture of products containing asbestos or in the
installation or use of those products. At March 31, 2004, there
were 2,354 such claims pending.
CSR has been settling claims since 1989. At March 31, 2004, CSR
had resolved around 127,000 claims in the United States,
including resolution of around 103,000 claims in mass
settlements in West Virginia, Texas, Mississippi and Ohio and
1,441 claims in Australia.
CSR recognized as a provision for product liability the best
estimate of the consideration required to settle the present
obligation for anticipated compensation payments and legal costs
as at the reporting date. In determining the provision, CSR
obtained independent expert advice in relation to the future
incidence and value of asbestos related claims in each of the
United States and Australia. Those assessments have projected
CSR's claims experience into the future using various modeling
techniques that take into account a range of possible outcomes.
The present value of the liabilities is estimated by discounting
the estimated cash flows using the pre-tax rate that reflects
the current market assessment of the time value of money and
risks specific to those liabilities. The provision includes an
appropriate prudential margin.
CSR has commenced proceedings in New Jersey against a number of
insurers who issued policies to CSR from around 1978 to 1989.
In those proceedings CSR seeks indemnity for U.S. asbestos
claims and certain other relief. Those proceedings are being
pursued by CSR as speedily as possible. Costs in relation to
this legal action are being deferred (2004: $18,600,000, 2003:
$10,000,000); however, the full potential benefit from this
litigation is not included in the financial statements.
At March 31, 2004, a provision of $324,000,000 (2003:
$332,300,000) has been made for all known claims and probable
future claims but not for such claims as cannot presently be
reliably measured. CSR cannot determine with certainty the
amount of its ultimate liability with respect to asbestos
related claims or the future impact on its financial condition.
However, taking into account the provision already included in
CSR's financial statements, the status of proceedings in
CSR's insurance litigation and current claims management
experience, the directors are of the opinion that asbestos
litigation in the United States and Australia will not have a
material adverse impact on CSR's financial condition.
ASBESTOS LITIGATION: ISG Says Bethlehem Claims Have Been Stayed
---------------------------------------------------------------
International Steel Group Inc. reported in a regulatory filing
with the Securities and Exchange Commission that in the ordinary
course of its business, Bethlehem Steel Corp. is involved in
various pending or threatened legal proceedings. In May 2003,
ISG Inc. acquired substantially all of the assets of Bethlehem
and its subsidiaries, including a total 62.3% direct and
indirect interest in Hibbing Taconite Co. (an iron ore mining
joint venture that is pro rata consolidated in ISG's
consolidated financial statements), and a 90% interest in
Ontario Iron Co. that owns surface, land and mineral leases used
by Hibbing Taconite.
The legal proceedings include a large number of cases in which
plaintiffs allege injury due to exposure to asbestos, allegedly
resulting from past operations of Bethlehem and others. All of
the asbestos cases resolved to date have either been dismissed
as to Bethlehem or settled for immaterial amounts. The
prosecution of any claims and any payments related to litigation
existing on October 15, 2001, the date of Bethlehem's filing for
protection under chapter 11 of the U.S. Bankruptcy Code, are
automatically stayed pending resolution of all unsecured claims
as part of a chapter 11 plan.
ASBESTOS LITIGATION: Norcross Asbestos Lawsuits Show Increase
-------------------------------------------------------------
Norcross Safety Products LLC is subject to various product
liability lawsuits and claims arising out of the use of
respiratory product lines manufactured by the Company's North
Safety Products subsidiary. In particular, North Safety
Products, its predecessors and/or the former owners of such
business are presently named as a defendant in around 711
lawsuits involving respirators manufactured and sold by it or
its predecessors. The CAR edition for April 30, 2004 mentioned
that there were 669 North Safety lawsuits at that time.
The Company is monitoring an additional 12 lawsuits in which it
feels that North Safety Products, its predecessors and/or the
former owners may be named as defendants. Collectively, these
723 lawsuits represent a total of around 24,000 (excluding
spousal claims) plaintiffs. Around 90% of these lawsuits
involve plaintiffs alleging they suffer from silicosis, with the
remainder alleging they suffer from other or combined injuries,
including asbestosis. These lawsuits typically allege that
these conditions resulted in part from respirators that were
negligently designed or manufactured. Invensys plc, formerly
Siebe plc, is contractually obligated to indemnify the Company
for any losses, including costs of defending claims, resulting
from respiratory products manufactured prior to the acquisition
of North Safety Products in October 1998.
In addition, the Company's North Safety Products subsidiary is
contractually entitled to indemnification from Norton Co., an
affiliate of Saint-Gobain, which owned the North Safety Products
business prior to Invensys. Pursuant to a December 14, 1982
asset purchase agreement, Siebe Norton Inc., a newly formed
wholly owned subsidiary of Norton Co., acquired the assets of
Norton's Safety Products Division and the stock of this company
was in turn acquired by Siebe Gorman Holdings PLC. Under the
terms of the Agreement, Siebe Norton Inc. did not assume any
liability for claims relating to products shipped by Norton Co.
prior to the closing date. Moreover, Norton Co. covenanted in
the Agreement to indemnify Siebe Norton and its successors and
assigns against any liability resulting from or arising out of
any state of facts, omissions or events existing or occurring on
or before the closing date, including, without limitation, any
claims arising in respect of products shipped by Norton Co. or
any of its affiliates prior to the closing date. Siebe Norton,
whose name was subsequently changed to Siebe North Inc., was
subsequently acquired by the Company as part of the 1998
acquisition of the North Safety Products business from Invensys.
Despite these indemnification arrangements, the Company could
potentially be liable for these losses or claims relating to
products manufactured prior to the October 1998 acquisition date
if Invensys fails to meet its obligations to indemnify the
Company and the Company could potentially be liable for these
losses and claims relating to products sold prior to January 10,
1983 if both Invensys and Norton fail to meet their obligations
to indemnify the Company. The Company could also be liable if
the alleged exposure involved the use of a product manufactured
by the Company after its October 1998 acquisition of the North
Safety Products business. Invensys is currently handling the
defense of all of the cases, and to date the Company has not
incurred any material costs with respect to these lawsuits. To
date, Invensys has sent the Company requests for reimbursement
totaling $26,000 relating to settled cases in which Invensys
claims that the period of alleged exposure included periods
after October 1998. Based on information Invensys provided to
the Company, the Company believes that Invensys has made
payments with respect to settlement of these claims of $513,900
for the three months ended April 3, 2004. The Company believes
that Invensys has the ability to pay these claims based on its
current financial position, as Invensys publicly disclosed.
Consistent with the current environment being experienced by
companies involved in silica and asbestos-related litigation,
there has been an increase in the number of asserted claims that
could potentially involve the Company. Based on information
Invensys provided, the Company believes activity related to
these lawsuits was as follows for the three months ended April
3, 2004: 680 beginning lawsuits, 70 new lawsuits, (13)
settlements, (14) dismissals and other, and 723 ending lawsuits.
Plaintiffs have asserted specific dollar claims in less than a
quarter of the estimated 711 cases pending as of April 3, 2004
in which North Safety Products, its predecessors and/or the
former owners of such businesses have been named as defendants.
A majority of jurisdictions prohibit specifying damages in tort
cases such as these, and most of the remaining jurisdictions do
not require such specification.
Of the 711 complaints, 542 do not specify the amount of damages
sought, 33 generally allege damages in excess of $50,000, 6
allege compensatory damages in excess of $50 and an unspecified
amount of punitive damages, 27 allege compensatory damages and
punitive damages, each in excess of $25,000, 9 generally allege
damages in excess of $100,000, 51 allege compensatory damages
and punitive damages, each in excess of $50,000,000, 36
generally allege damages of $15,000, 2 allege compensatory
damages and punitive damages, each in the amount of $15,000, 1
alleges compensatory damages and punitive damages, each in
excess of $10,000, 1 alleges compensatory damages and punitive
damages, each in excess of $15,000, 1 generally alleges damages
in excess of $25,000, 1 generally alleges damages in excess of
$4,000 and 1 generally alleges damages not to exceed $290,000.
The Company currently does not have access to the previously
mentioned additional 12 monitored cases, and therefore does not
know whether these cases allege specific damages, and, if so,
the amount of such damages, but are in the process of seeking to
obtain such information.
The Company maintains insurance against product liability claims
(with the exception of asbestosis and silicosis cases, for which
coverage is not commercially available), but it is possible that
its insurance coverage will not continue to be available on
terms acceptable to the Company or that such coverage will not
be adequate for liabilities actually incurred. The Company has
a reserve of $2,300,000 against potential uninsured product
liability claims of North Safety Products for periods prior to
October 1998. The reserve was established at the date of
acquisition and relates to potential claims primarily associated
with fall protection products sold in Canada. The Company has
not recorded any losses against this reserve to date. This
reserve is re-evaluated periodically, and additional charges or
credits to operations may result as additional information
becomes available.
The Company does not have a reserve for product liability claims
for use of products manufactured after the 1998 acquisition of
North Safety Products, as it is not involved in any material
lawsuits relating exclusively to product usage in the periods
after October 1998. In addition, the Company is not a party to
any lawsuits involving asbestosis or silicosis relating
exclusively to product usage in the period after October 1998.
ASBESTOS LITIGATION: Owens Illinois Disposes of 310,000 Claims
--------------------------------------------------------------
As of March 31, 2004, Owens Illinois Co. has disposed of the
asbestos claims of around 310,000 plaintiffs and claimants at an
average indemnity payment per claim of about $6,000. Certain of
these dispositions have included deferred amounts payable over
periods ranging up to seven years. Deferred amounts payable
totaled about $90,000,000 at March 31, 2004 ($87,000,000 at
December 31, 2003) and are included in the foregoing average
indemnity payment per claim. A part of the Company's objective
is to achieve, where possible, resolution of asbestos claims
pursuant to claims-handling agreements. Under such agreements,
qualification by meeting certain illness and exposure criteria
has tended to reduce the number of claims presented to the
Company that would ultimately be dismissed or rejected due to
the absence of impairment or product exposure evidence. The
Company expects that as a result, although aggregate spending
may be lower, there may be an increase in the per claim average
indemnity payment involved in such resolution. In this regard,
although the average of such payments has been somewhat higher
following the implementation of the claims-handling agreements
in the mid-1990s, the annual average amount has not varied
materially from year to year in recent years.
Beginning with the initial liability of $975,000,000 established
in 1993, the Company has accrued a total of $2,700,000,000
through 2003, before insurance recoveries, for its asbestos-
related liability. The Company expects that the total asbestos-
related cash payments will be moderately lower in 2004 compared
to 2003 and will continue to decline thereafter as the
preexisting but presently unasserted claims withheld under the
claims handling agreements are presented to the Company and as
the number of potential future claimants continues to decrease.
The Company expects to conduct a comprehensive review of its
asbestos-related liabilities and costs annually in connection
with finalizing and reporting its annual results of operations,
unless significant changes in trends or new developments warrant
an earlier review. If the results of an annual comprehensive
review indicate that the existing amount of the accrued
liability is insufficient to cover its estimated future
asbestos-related costs, then the Company will record an
appropriate charge to increase the accrued liability. The
Company's reported results of operations for 2003 were
materially affected by the $450,000,000 fourth-quarter charge
for asbestos-related costs and asbestos-related payments
continue to be substantial.
ASBESTOS LITIGATION: SCPIE Losses Worth $65,000,000 Paid By HIG
---------------------------------------------------------------
Highlands Insurance Co. advised SCPIE Holdings Inc. (and its
subsidiaries, principally SCPIE Indemnity Co., American
Healthcare Indemnity Co., American Healthcare Specialty
Insurance Co., SCPIE Underwriting Ltd. and SCPIE Management Co.)
that at March 31, 2004, the HIG insurance company subsidiaries
had paid losses and LAE under the subject policies of
$65,000,000 and had established case loss reserves of
$12,100,000, net of reinsurance. Based on a limited review of
the exposures remaining, SCPIE Holdings estimates that incurred
but not reported losses range from $6,700,000 to $10,000,000 for
a total loss and loss expense reserve of $18,800,000 to
$22,100,000. This estimate is not based on a full reserve
analysis of the exposures. To the extent Highlands is declared
insolvent at some future date by a court of competent
jurisdiction and is unable to pay losses under the subject
policies, the Company would be responsible to pay the amount of
the losses incurred and unpaid at such date and would be
subrogated to the rights of the policyholders as creditors of
Highlands. The Company may also be entitled to indemnification
of a portion of this loss from certain of the reinsurers of
Highlands. The quarterly financial statements of Highlands
filed with the Texas Department of Insurance as of September 30,
2003, showed $660,400,000 in assets and policyholder surplus of
$5,200,000.
On November 6, 2003, the State of Texas obtained an order in the
Texas District Court appointing the Texas Insurance Commissioner
as the permanent Receiver of Highlands and placing the Receiver
in possession of all assets of Highlands. The order
specifically enjoined various persons, including the plaintiff
in a California asbestos action (against Highlands and other
insurers) who had obtained a $57,400,000 judgment against
Highlands, from taking any action against the assets of
Highlands. The order expressly provided that it did not
constitute a finding of Highlands' insolvency nor an
authorization to liquidate Highlands. On December 1, 2003,
however, the State of Texas filed an application to liquidate
Highlands, to forestall certain actions taken by the plaintiff
in the California action to perfect a judgment lien on certain
assets of Highlands. The State of Texas alleged that these
actions would make it unfeasible to rehabilitate Highlands. The
California plaintiff has disputed these allegations and filed an
opposition to the entry of any liquidation order. A hearing on
the application for liquidation was scheduled for March 9, 2004
in the Texas District Court. On February 27, 2004, the State of
Texas and the California plaintiff filed a stipulation with the
Texas court postponing the liquidation hearing to no earlier
than August 9, 2004. If an order of liquidation is ultimately
entered and becomes final, the Company would likely be required
to assume Highlands' then remaining obligations under the
subject policies.
ASBESTOS LITIGATION: M & F Strikes Deals With Pepsi And Cooper
--------------------------------------------------------------
M & F Worldwide Corp. reported that its indirect wholly owned
subsidiary Pneumo Abex Corp. has been named, typically along
with 10 to as many as 100 or more other companies, as a
defendant in various personal injury lawsuits claiming damages
relating to exposure to asbestos. Pursuant to indemnification
agreements, PepsiAmericas Inc., formerly known as Whitman Corp.
(the "Original Indemnitor"), has ultimate responsibility for all
the remaining asbestos-related claims asserted against Pneumo
Abex through August 1998 and for certain asbestos-related claims
asserted thereafter. In connection with the sale by Abex in
December 1994 of its Friction Products Division, a subsidiary
(the "Second Indemnitor") of Cooper Industries Inc. (the
"Indemnity Guarantor") assumed responsibility for substantially
all asbestos-related claims asserted against Pneumo Abex after
August 1998 and not indemnified by the Original Indemnitor.
Federal-Mogul Corp. purchased the Second Indemnitor in October
1998. In October 2001, the Second Indemnitor filed a petition
under Chapter 11 of the U.S. Bankruptcy Code and stopped
performing its indemnity obligations to the Company. The
Indemnity Guarantor guarantees performance of the Second
Indemnitor's indemnity obligation. Following the bankruptcy
filing of the Second Indemnitor, the Company confirmed that the
Indemnity Guarantor would fulfill the Second Indemnitor's
indemnity obligations to the extent that the Second Indemnitor
is no longer performing them.
Pneumo Abex's former subsidiary maintained product liability
insurance covering substantially all of the period during which
asbestos-containing products were manufactured. The subsidiary
commenced litigation in 1982 against a portion of these insurers
in order to confirm the availability of this coverage. As a
result of settlements in that litigation, other coverage
agreements with other carriers and payments by the Original
Indemnitor, the Second Indemnitor and the Indemnity Guarantor
pursuant to their indemnities, Pneumo Abex is receiving
reimbursement each month for substantially all of its monthly
expenditures for asbestos-related claims.
ASBESTOS LITIGATION: St. Paul Travelers Resolves TPC Litigation
---------------------------------------------------------------
On May 24, 2004, The St. Paul Travelers Companies, Inc. (NYSE:
STA) issued a press release announcing it had executed an
agreement resolving substantially all common law asbestos-
related direct actions pending against its Travelers Property
Casualty Corp. subsidiaries. These actions allege, among other
things, a general, non-statutory duty to disclose to the public
the hazards of asbestos. The settlement, if it receives court
approval, would also bar similar future direct actions against
Travelers.
As announced on November 21, 2003 and March 15, 2004, Travelers
previously entered into a settlement of certain statutory-based
direct action claims, including purported class actions in West
Virginia and elsewhere. The prior settlement did not resolve
the so-called common law direct actions, which are the subject
of this settlement. The new settlement does not affect the
settlement of statutory-based claims, which also remains subject
to court approval. If the court approves both settlements, all
pending and similar future asbestos-related statutory direct
actions and substantially all pending and similar future
asbestos-related common law direct actions against Travelers
will be resolved.
Travelers does not believe that there is any merit to these
direct action cases, whether based on statute or common law (as
several courts in Texas and Ohio have recently determined).
However, by entering into the direct action settlements,
Travelers has availed itself of an opportunity to resolve not
only the pending cases but similar future cases if the above
settlements are approved by the bankruptcy court in connection
with the bankruptcy of former Travelers policy holder Johns-
Manville.
The settlement will make a fund of up to $70,000,000 available
to claimants plus up to $20,000,000 in legal fees. St. Paul
Travelers will fund the settlement from its unallocated asbestos
reserves and does not anticipate taking an earnings charge as a
result of this settlement. The agreement requires all claimants
who receive compensation from the fund to provide a general
release for all asbestos-related direct action claims they may
have against Travelers. The settlement is subject to a number
of contingencies, including, among others, final court approval.
"I am pleased with this settlement and the substantial reduction
we have achieved in our exposure to asbestos-related claims over
the past year," said Jay S. Fishman, Chief Executive Officer.
"As with our settlement of the statutory-based direct actions,
this settlement is a product of our efforts to seek favorable
resolution of asbestos-related litigation."
St. Paul Travelers is a leading provider of commercial property-
liability insurance and asset management services. Under the
Travelers brand, the company is also a leading underwriter of
auto and homeowners insurance through independent agents. For
more information, visit http://www.stpaultravelers.com.
ASBESTOS LITIGATION: St. Paul Reveals Agreements May Be Restored
----------------------------------------------------------------
St. Paul Travelers Companies Inc. said in a regulatory filing
that if the 108th U.S. Congress enacts Federal asbestos reform
legislation into law, Equitas Ltd. may elect to recoup around
$150,000,000 from Travelers Property Casualty Corp. (TPC) and,
if Equitas makes that election, the reinsurance agreements for
asbestos coverage and certain claim disputes related thereto
will be reinstated.
In May 2002, TPC agreed with around 36 other insurers and PPG
Industries Inc. on key terms to settle asbestos-related coverage
litigation under insurance policies issued to PPG. While there
remain a number of contingencies, the Company believes that the
completion of the settlement pursuant to the terms announced in
May 2002 is likely. TPC's single payment contribution to the
proposed settlement is around $388,800,000 after reinsurance.
TPC is involved in a bankruptcy and other proceedings relating
to ACandS Inc., formerly a national installer of products
containing asbestos. The proceedings involve disputes as to
whether and to what extent any of ACandS' potential liabilities
for bodily injury asbestos claims were covered by insurance
policies issued by TPC. There were a number of developments in
the proceedings since the beginning of 2003, including two
decisions that were favorable to TPC.
One of the proceedings was an arbitration commenced in January
2001 to determine whether and to what extent ACandS' financial
obligations for bodily injury asbestos claims are subject to
insurance policy aggregate limits. On July 31, 2003, the
arbitration panel ruled in TPC's favor that asbestos bodily
injury claims paid by ACandS on or after that decision date are
subject to the aggregate limits of the policies issued to
ACandS, which have been exhausted. In October 2003, ACandS
commenced a lawsuit seeking to vacate the arbitration award as
beyond the panel's scope of authority (ACandS, Inc. v. Travelers
Casualty and Surety Co., U.S.D.Ct., E.D. Pa.). TPC has filed its
opposition to ACandS' motion to vacate.
ACandS filed for bankruptcy in September 2002 (In re: ACandS,
Inc., pending in the U.S. Bankruptcy Court for the District of
Delaware). On January 26, 2004, the bankruptcy court issued a
decision rejecting confirmation of ACandS' proposed plan of
reorganization. The bankruptcy court found, consistent with
TPC's objections to ACandS' proposed plan, that the proposed
plan was not fundamentally fair, was not proposed in good faith
and did not comply with Section 524(g) of the Bankruptcy Code.
ACandS has filed a notice of appeal of the bankruptcy court's
decision and has filed objections to the bankruptcy court's
findings of fact and conclusions of law in the U.S. District
Court. TPC has moved to dismiss the appeal and objections and
has also filed an opposition to ACandS' objections.
In its proposed plan of reorganization, ACandS sought to
establish a trust to pay asbestos bodily injury claims against
it and sought to assign to the trust its rights under the
insurance policies issued by TPC. The proposed plan and
disclosure statement filed by ACandS claimed that ACandS had
settled the vast majority of asbestos-related bodily injury
claims currently pending against it for about $2,800,000,000.
ACandS asserts that based on a prior agreement between TPC and
ACandS and ACandS' interpretation of the July 31, 2003
arbitration panel ruling, TPC is liable for 45% of the
$2,800,000,000. In August 2003, ACandS filed a new lawsuit
against TPC seeking to enforce this position (ACandS, Inc. v.
Travelers Casualty and Surety Co., U.S.D.Ct., E.D. Pa.). TPC
has not yet responded to the complaint but believes it has
meritorious defenses against the allegations.
In addition to the proceedings described, TPC and ACandS are
involved in litigation (ACandS, Inc. v. Travelers Casualty and
Surety Co., U.S.D.Ct., E.D. Pa.) commenced in September 2000.
This litigation primarily involves the extent to which the
asbestos bodily injury claims against ACandS are subject to
occurrence limits under insurance policies issued by TPC. TPC
has filed a motion to dismiss this action based upon the July
31, 2003 arbitration decision.
All three of the ongoing proceedings were stayed pending the
bankruptcy court's ruling on ACandS' plan of reorganization. In
light of the issuance of that ruling, the Company is now
evaluating its next steps in the proceedings. The Company
believes that the findings of the Bankruptcy Court support
several of TPC's assertions in the proceedings.
In October 2001 and April 2002, two purported class action suits
(Wise v. Travelers and Meninger v. Travelers), were filed
against TPC and other insurers (not including the St. Paul
companies) in state court in West Virginia. The plaintiffs in
these cases, which were subsequently consolidated into a single
proceeding in Circuit Court of Kanawha County, West Virginia,
allege that the insurer defendants engaged in unfair trade
practices by inappropriately handling and settling asbestos
claims. The plaintiffs seek to reopen large numbers of settled
asbestos claims and to impose liability for damages, including
punitive damages, directly on insurers. Lawsuits similar to
Wise have been filed in Massachusetts (2002) and Hawaii (filed
in 2002, and served in May 2003) (these suits are collectively
referred to as the "Statutory and Hawaii Actions"). Also, in
November 2001, plaintiffs in consolidated asbestos actions
pending before a mass tort panel of judges in West Virginia
state court moved to amend their complaint to name TPC as a
defendant, alleging that TPC and other insurers breached alleged
duties to certain users of asbestos products. In March 2002,
the court granted the motion to amend. Plaintiffs seek damages,
including punitive damages. Lawsuits seeking similar relief and
raising allegations similar to those presented in the West
Virginia amended complaint are also pending against TPC in
Louisiana, Ohio and Texas state courts (these suits, together
with the West Virginia suit, are collectively referred to as the
"common law claims"). All of the actions, other than the Hawaii
Actions, are currently subject to a temporary restraining order
entered by the federal bankruptcy court in New York, which had
previously presided over and approved the reorganization in
bankruptcy of TPC's former policyholder Johns Manville. In
August 2002, the bankruptcy court conducted a hearing on TPC's
motion for a preliminary injunction prohibiting further
prosecution of the lawsuits pursuant to the reorganization plan
and related orders. At the conclusion of this hearing, the
court ordered the parties to mediation, appointed a mediator and
continued the temporary restraining order. During 2003, the
same bankruptcy court extended the existing injunction to apply
to an additional set of cases filed in various state courts in
Texas and Ohio as well as to the attorneys who are prosecuting
these cases. The order also enjoins these attorneys and their
respective law firms from commencing any further lawsuits
against TPC based upon these allegations without the prior
approval of the court. The parties met with the mediator
several times, and on November 19, 2003, the parties advised the
bankruptcy court that a settlement in principle of the Statutory
and Hawaii Actions had been reached. This settlement in
principle includes a $412,000,000 lump sum payment by TPC,
subject to a number of significant contingencies, including the
execution of two definitive settlement agreements, one relating
to the Statutory Actions and the other pertaining to the Hawaii
Actions. The Statutory Action definitive settlement agreement
has been executed and signed by all the parties. TPC is
negotiating the terms of the Hawaii settlement agreement which
it anticipates completing in the near term. In addition, the
bankruptcy court must issue orders approving the settlement
agreements and clarifying certain prior orders of the bankruptcy
court concerning the scope and breadth of the injunction
previously entered by that court in the Johns Manville
proceeding. All of these orders must become final and all
appeals seeking to reverse these orders must have been denied in
order for the settlement to take effect. The bankruptcy court
also held hearings with respect to TPC's motion to enforce the
court's prior injunction as respects to all of the pending
common law claims. The bankruptcy court scheduled May 24, 25
and 26, 2004 as the dates to hear the parties concerning
approval of the settlements of the Statutory and Hawaii Actions
as well as TPC's request for injunctions with respect to all
pending common law claims. If TPC is successful in finalizing
its settlement of the Statutory and Hawaii Actions and obtains a
ruling concerning the applicability of the prior injunctions
with respect to the common law claims, then the Statutory and
Hawaii Actions will have been resolved and the pending common
law claims will have been enjoined. If all of the conditions of
the Statutory and Hawaii settlements are not satisfied, or to
the extent that the bankruptcy court does not enforce the prior
injunctions with respect to the common law claims, then the
temporary restraining order currently in effect will be lifted
and TPC will again be subject to the pending litigation and
could be subject to additional litigation based on similar
theories of liability.
TPC's numerous defenses in all the direct action cases have been
raised in initial motions to dismiss filed by TPC and other
insurers. There have been favorable rulings during 2003 in
Texas on some of these motions filed by other insurers during
the pendency of the Johns Manville stay that dealt with statute
of limitations and the validity of the alleged causes of
actions.
Because each policyholder presents different liability and
coverage issues, the Company generally evaluates the exposure
presented by each policyholder on a policyholder-by-policyholder
basis. When the gross ultimate exposure for indemnity and
related claim adjustment expense is determined for a
policyholder, the Company calculates, by each policy year, a
ceded reinsurance projection based on any applicable facultative
and treaty reinsurance, as well as past ceded experience.
Adjustments to the ceded projections also occur due to actual
ceded claim experience and reinsurance collections.
Conventional actuarial methods are not utilized to establish
asbestos reserves. The Company's evaluations have not resulted
in any data from which a meaningful average asbestos defense or
indemnity payment may be determined.
With respect to asbestos exposures, the Company also compares
its historical direct and net loss and expense paid experience,
year-by-year, to assess any emerging trends, fluctuations or
characteristics suggested by the aggregate paid activity. Net
asbestos losses paid were $93,200,000 for 2004 first quarter
compared to $189,700,000 for 2003 first quarter. Around 50% in
the 2004 first quarter and 77% in the 2003 first quarter of
total paid losses relate to policyholders with whom the Company
previously entered into settlement agreements that limit the
Company's liability. Excluding payments made related to prior
settlements, loss payments in the first quarter of 2004 were
comparable to the first quarter of 2003. The 2003 first quarter
net cash flows provided by operating activities benefited from
premium rate increases, the receipt of $360,700,000 from
Citigroup related to recoveries under the asbestos
indemnification agreement. Some of the Company's loss reserves
are for asbestos and environmental claims and related
litigation, which aggregated $3,137,000,000 at March 31, 2004.
In April 2004, the U.S. District Court for the Northern District
of California issued an order affirming the confirmation order
of the U.S. Bankruptcy Court for the Northern District of
California, which approved the June 2002 asbestos-related
settlement. Following that final confirmation, at March 31,
2004, $807,000,000 was recorded in both "Other assets" and
"Other liabilities," representing payments the Company made and
held in escrow that would have been returned to it had the final
confirmation of the Bankruptcy Court not occurred. Following
that final confirmation in April 2004, those funds were released
to the trust for the payment of asbestos related claims. The
release of these funds completes the St. Paul Parties'
obligations under the settlement agreement.
Total gross environmental and asbestos reserves at March 31,
2004, of $773,000,000 represented around 4% of gross
consolidated reserves of $19,500,000,000. On March 16, 2004,
Travelers filed a Current Report on Form 8-K, dated March 15,
2004, reporting that Travelers had executed a definitive
agreement settling asbestos-related statutory-based direct
actions pending against Travelers under various unfair trade
practices and similar statutes, and furnishing the related press
release. On April 22, 2004, STA filed a Current Report on Form
8-K, dated April 16, 2004, reporting that final court approval
had been obtained for STA's asbestos-related litigation
settlement agreement related to the Western MacArthur Companies.
Management believes that the reserves carried for asbestos and
environmental claims at March 31, 2004 are appropriately
established based upon known facts, current law and management's
judgment. However, the uncertainties surrounding the final
resolution of these claims continue, and it is presently not
possible to estimate the ultimate exposure for asbestos and
environmental claims and related litigation.
ASBESTOS LITIGATION: Standard Motors Maybe Liable In 3,400 Cases
----------------------------------------------------------------
Standard Motor Products reported that its accrued asbestos
liabilities amounted to $23,787,000 at March 31, 2004 and
$24,426 at December 31, 2003. Losses from discontinued
operation reflect legal expenses associated with its asbestos
related liability. The Company recorded $400,000 and $300,000
as a loss from discontinued operations for the three months
ended March 31, 2004 and 2003, respectively. The Company is
responsible for certain future liabilities relating to alleged
exposure to asbestos containing products. A September 2002
actuarial study estimated a liability for settlement payments
ranging from $27,300,000 to $58,000,000. The Company concluded
that no amount within the range of settlement payments was more
likely than any other and, therefore, recorded the low end of
the range as the liability associated with future settlement
payments through 2052 in its consolidated financial statements,
in accordance with generally accepted accounting principles.
At March 31, 2004, around 3,400 cases were outstanding for which
the Company was responsible for any related liabilities. There
were 3,300 cases at December 31, 2003 mentioned in the CAR
edition for April 16, 2004. Since inception in September 2001,
the amount paid for settled claims is $1,500,000. The Company
does not have insurance coverage for the defense and indemnity
costs associated with these claims.
ASBESTOS LITIGATION: WABTEC, Affiliates' Exposure Cases Rising
--------------------------------------------------------------
Actions were filed against Westinghouse Air Brake Technologies
Corp. (WABTEC) and certain of its affiliates in various
jurisdictions across the United States by persons alleging
bodily injury as a result of exposure to asbestos-containing
products. Since 2000, the number of such claims has increased.
Most of these claims have been made against WABTEC's wholly
owned subsidiary, Railroad Friction Products Corp. (RFPC), and
are based on a product sold by RFPC before WABTEC acquired
American Standard Inc.'s (ASI) 50% interest in RFPC in 1990.
WABTEC acquired the remaining interest in RFPC in 1992. These
claims include a suit against RFPC by ASI seeking contribution
and indemnity for asbestos claims brought against ASI that ASI
alleges claim exposure to RFPC's product.
Most of these claims, including all of the RFPC claims, are
submitted to insurance carriers for defense and indemnity or to
non-affiliated companies that retain the liabilities for the
asbestos-containing products at issue. Neither the Company nor
its affiliates have to date incurred material costs related to
these asbestos claims. The Company cannot, however, assure that
all these claims will be fully covered by insurance or that the
indemnitors will remain financially viable.
ASBESTOS ALERT: AXA Involved In Disputes Over Exposure Policy
-------------------------------------------------------------
In prior years, AXA issued insurance policies and assumed
reinsurance for cover related to asbestos exposure. Its
insurance companies are involved in disputes regarding policy
coverage and judicial interpretation of legal liability for
potential asbestos claims. AXA receives notices of potential
claims asserting asbestos losses under insurance policies it
issued or reinsured. Such claim notices are frequently merely
precautionary in nature. There are significant uncertainties
that affect the insurance companies' ability to estimate future
losses for these types of claims and there are a number of
issues now being litigated, which may ultimately determine
whether and to what extent insurance coverage exists. In
France, the Supreme Court (Cour de Cassation) has extended the
notion of inexcusable offense to occupational diseases. AXA
companies concerned by this new case law are reviewing their
portfolio so as to identify the contracts that may be concerned
by this extended guarantee.
Under insurance and reinsurance contracts related to
environmental pollution and asbestos, AXA paid claims and legal
costs of EUR53,000,000 in 2003 (2002: EUR45,000,000 and 2001:
EUR77,000,000). At December 31, 2003, AXA had made cumulative
payments relating to such contracts of EUR536,000,000 (2002:
EUR377,000,000). The main reason for this change, alongside
payments made during the year, was the adjustment of the
declared amount of payments taking place prior to the
acquisitions of GRE (Guardian Royal Exchange) and AXA Provincial
in the UK, which did not affect 2003 results.
At December 31, 2003, AXA had insurance claim reserves (gross of
reinsurance) of EUR944,000,000 or EUR858,000,000 net of
reinsurance (2002: EUR909,000,000 gross of reinsurance and
EUR825,000,000 net of reinsurance), including
(1) EUR365,000,000 for reported claims (2002:
EUR350,000,000) and
(2) EUR579,000,000 for IBNR (incurred but not reported)
claims (2002: EUR559,000,000).
The IBNR liabilities are estimated and evaluated regularly based
on information received by management. AXA monitors potential
claims for which it has received notice.
COMPANY PROFILE
AXA (NYSE: AXA; Euronext Paris: CS)
25 Avenue Matignon
75008 Paris, France
Phone: +33-1-40-75-5700
Fax: +33-1-40-75-4696
http://www.axa.com
Employees : 90,500
Revenue :$123,992,400,000.00
Net Income :$ 1,261,500,000.00
Assets :$565,088,500,000.00
Liabilities :$532,616,500,000.00
(As of December 31, 2003)
Description: AXA, which started as a collection of mutual
insurance companies, is one of the world's largest insurance
companies (behind Allianz and ING) and a financial management
powerhouse. In the U.S., AXA owns AXA Financial, which owns a
majority of investment manager Alliance Capital Management. The
company also has major subsidiaries in the UK (AXA UK - formerly
Sun Life and Provincial Holdings), Australia (National Mutual),
and Belgium (Royale Belge). The companies offer life insurance,
personal and commercial property/casualty insurance,
reinsurance, financial services, and real estate investment
services.
ASBESTOS ALERT: Bunge Divulges Injury Claims Against Lesieur
--------------------------------------------------------------
In July 2003, Bunge Ltd. sold Lesieur, a French producer of
branded bottled vegetable oils, to Saipol, an oilseed processing
joint venture between Bunge and Sofiproteol (the financial arm
of the French oilseed farmer's association). Some employees of
Lesieur at two of its former facilities in France have made
claims for disability pensions from the French social security
administration relating to illnesses potentially connected to
asbestos exposure associated with production processes of
certain discontinued product lines at the facilities. Lesieur
is not named as a party to these claims.
In addition, two cases are pending against Lesieur before the
French social security courts to determine the extent of
Lesieur's liability, if any, for asbestos exposure.
Additionally, one case related to asbestos exposure filed
against Cereol in Italy by the heirs of a former employee was
decided by the trial court in favor of the plaintiff for
EUR300,000. The Company is appealing this decision. Bunge is
unable to predict whether additional claims will be filed in
France, Italy or other European countries. While it is
difficult to assess the potential liability for these claims,
Bunge does not expect that any liability would have a material
adverse effect on its financial results or business.
COMPANY PROFILE
Bunge Ltd. (NYSE: BG)
50 Main Street
White Plains, NY 10606
Phone: 914-684-2800
http://www.bunge.com
Employees : 23,295
Revenue : $22,165,000,000.00
Net Income : $ 411,000,000.00
Assets : $ 9,884,000,000.00
Liabilities : $ 7,507,000,000.00
(As of December 31, 2003)
Description: Even after cutting back on consumer foods, Bunge
Ltd. (formerly Bunge International) is still sizable. The
company is a leading global soybean exporter, and, through
subsidiary Bunge North America, is a major US food processor.
It is also a leading South American fertilizer maker. To focus
on soybean, grain trading, and fertilizer, Bunge sold all of its
consumer food processing firms, except Bunge Alimentos
(margarine and soybeans). Its joint venture with DuPont makes
specialty food ingredients. The final acquisition of Cereol in
2003 made Bunge the world's largest oilseed producer. Founded
in 1818, Bunge was held mostly by families descended from
founder Johann Bunge until it went public in August 2001.
ASBESTOS ALERT: JHI NV To Indemnify BPB U.S. For Liabilities
------------------------------------------------------------
Under the terms of James Hardie Industries NV's agreement to
sell its Gypsum business to BPB U.S. Holdings Inc., JHI NV
agreed to indemnify BPB U.S. Holdings Inc. for any future
liabilities arising from asbestos-related injuries to persons or
property. Although the Company is not aware of any asbestos-
related claims arising from the Gypsum business, nor
circumstances that would give rise to such claims, under the
sale agreement, the Company's obligation to indemnify the
purchaser for liabilities arising from asbestos-related injuries
arises only if such claims exceed $5,000,000 in the aggregate,
is limited to $250,000,000 in the aggregate and will continue
for 30 years after the closing date of the sale of the Gypsum
business.
On February 16, 2001, ABN 60 000 009 263 Pty Ltd, formerly James
Hardie Industries Ltd (JHIL) announced that it had established
the Foundation to compensate individuals with claims against two
former James Hardie subsidiaries and to fund medical research
into asbestos-related diseases. ABN 60 gifted AUS3,000,000
($1,700,000) in cash and transferred ownership of Amaca Pty Ltd
(formerly James Hardie & Coy Pty Ltd) and Amaba Pty Ltd
(formerly Jsekarb Pty Ltd) to the Foundation, a special purpose
charitable foundation established to fund medical and scientific
research into asbestos-related diseases. JH & Coy and Jsekarb
manufactured and marketed asbestos-related products prior to
1987, when all such activities ceased.
The Foundation is managed by independent trustees and operates
entirely independently of James Hardie. James Hardie does not
control the activities of the Foundation in any way and,
effective from February 16, 2001, does not own or control the
activities of JH & Coy or Jsekarb. In particular, the trustees
are responsible for the effective management of claims against
JH & Coy and Jsekarb, and for the investment of their assets.
James Hardie has no economic interest in the Foundation, JH &
Coy or Jsekarb; it has no right to dividends or capital
distributions, nor will it benefit in the event that there is
ultimately a surplus of funds in the Foundation, JH & Coy or
Jsekarb following satisfaction of all asbestos-related
liabilities.
JH & Coy, Jsekarb and ABN 60 have all agreed to indemnify JHI NV
and its related corporate entities for past and future asbestos-
related liabilities as part of the establishment of the
respective foundations. Jsekarb and ABN 60's obligation to
indemnify JHI NV and its related entities includes claims that
may arise associated with the manufacturing activities of those
companies.
COMPANY PROFILE
BPB U.S. Holdings Inc.
2424 Lakeshore Rd. West
Mississauga, Ontario L5J 1K4, Canada
Phone: 905-823-9881
Fax: 905-823-4860
http://www.bpb-na.com
Description: BPB is the world's leading gypsum company. This
hydrous calcium sulfate mineral is used especially in plaster
materials. Besides ceilings, BPB uses gypsum to make and market
ceiling suspension systems, finishing products, wallboards, and
wall panels. Its brands include Celotex, Capaul, Gyptone,
Interior Pro, ProFin, and ProRoc.
ASBESTOS ALERT: Old Republic Intl Discloses Reserves Information
----------------------------------------------------------------
At March 31, 2004, Old Republic International Company's
asbestosis and environmental claim reserves amounted to
$112,900,000 (gross) and $80,800,000 (net) in were included in
its general insurance segment reserves. Except for a small
portion that emanates from ongoing primary insurance operations,
a substantial majority of the asbestosis and environmental
(A&E) claim reserves posted by Old Republic stem mainly from its
participations in assumed reinsurance treaties and insurance
pools. Substantially all such participations were discontinued
15 or more years ago and have since been in run-off status.
With respect to the primary portion of gross A&E reserves, Old
Republic administers the related claims through its claims
personnel as well as outside attorneys, and posted reserves
reflect its best estimates of ultimate claim costs. The claims
departments of unrelated primary or ceding reinsurance companies
handle claims administration for the assumed portion of the
Company's A&E exposures. While the Company performs periodic
reviews of a portion of claim files so managed, the overall A&E
reserves it establishes respond to the paid claim and case
reserve activity reported to the Company as well as available
industry statistical data such as so-called survival ratios.
Such ratios represent the number of years' average paid losses
for the three or five most recent calendar years that are
encompassed by an insurer's A&E reserve level at any point in
time. According to this simplistic appraisal of an insurer's
A&E loss reserve level, Old Republic's average five-year
survival ratios stood at 6.9 years (gross) and 10.5 years (net
of reinsurance) as of March 31, 2004. Incurred net losses for
asbestosis and environmental claims have averaged 1.2% of
General Insurance Group incurred losses over the past five years
ended December 31, 2003.
COMPANY PROFILE
Old Republic International Co. (NYSE: ORI)
307 N. Michigan Ave.
Chicago, IL 60601
Phone: 312-346-8100
Fax: 312-726-0309
http://www.oldrepublic.com
Employees : 6,645
Revenue : $ 3,285,800,000.00
Net Income : $ 459,800,000.00
Assets : $ 9,712,300,000.00
Liabilities : $ 6,158,600,000.00
(As of December 31, 2003)
Description: Through dozens of subsidiaries covering the U.S.
and Canada, Old Republic International offers general insurance,
including commercial property & casualty and automobile
insurance, general liability, and workers' compensation to
transportation, construction, and energy services companies.
Old Republic is one of the US's top title insurance companies,
with offices across the US. Although the firm's oldest
subsidiary has offered life insurance since 1887, that segment
now accounts for less than 5% of Old Republic's sales.
ASBESTOS ALERT: PartnerRe Ltd. States Asbestos Claims Exposure
--------------------------------------------------------------
PartnerRe Ltd. says in a regulatory filing with the Securities
and Exchange Commission that in the business considered to have
a long reporting tail is the Company's exposure to asbestos
claims is included. The Company's reserve for unpaid losses and
loss expenses for asbestosis and environmental exposures did not
change significantly since December 31, 2003.
The Company's reserves for unpaid losses and loss expenses
include an estimate for its net ultimate liability for asbestos
and environmental claims. Ultimate values for such claims
cannot be estimated using traditional reserving techniques.
There are significant uncertainties in estimating the amount of
the Company's potential losses for these claims and these
uncertainties are not likely to be resolved in the near future.
The Company actively evaluates potential exposure to asbestos
and environmental claims and establishes additional reserves as
appropriate. The Company believes that it has made a reasonable
provision for these exposures and is unaware of any specific
issues that would materially affect its estimates.
COMPANY PROFILE
PartnerRe Ltd. (NYSE: PRE)
96 Pitts Bay Road
Pembroke, Bermuda HM 08
Phone: 44-1-292-0888
Fax: 44-1-292-6080
http://www.partnerre.com
Employees : 897
Revenue : $ 3,872,900,000.00
Net Income : $ 467,700,000.00
Assets : $10,903,000,000.00
Liabilities : $ 8,308,600,000.00
(As of December 31, 2003)
Description: PartnerRe Ltd. is a leading international
reinsurance group. The Company provides multi-line reinsurance
to insurance companies on a worldwide basis through its
principal offices in Bermuda, Greenwich, Paris and Zurich, its
branch offices in Hong Kong, Singapore and Toronto, and its
representative offices in Seoul, Tokyo and Santiago.
Risks reinsured include property and casualty/motor,
catastrophe, life, alternative risk transfer and specialty
lines: agriculture, aviation & space, credit & surety, energy
on-shore, engineering, marine and energy offshore, specialty
casualty and specialty property.
ASBESTOS ALERT: Transpacific Mines Closure Forced By Asbestosis
---------------------------------------------------------------
Transpacific Resources Inc., a development stage entity,
developed and operated two asbestos mines at Barraba, New South
Wales, Australia and Baie Verte, Newfoundland from the mid-
1960's to the late 1980's. Their combined production totaled
120,000 tons of asbestos a year, with annual revenue of
$60,000,000, and they were operated in partnership with the
Government of New South Wales and Newfoundland respectively.
Asbestosis forced their closure and Transpacific directed its
activities to the environmental reclamation of fine coal from
waste tailings ponds.
COMPANY PROFILE
Transpacific Resources Inc. (TSX-V: YTQ; Nasdaq OTCBB: TRIOF)
130 Adelaide Street West, Suite 2800
Toronto, Ontario
Canada M5H 3P5
Phone: 519-848-3388
Fax: 519-848-6705
http://www.transpacificresources.com
Description: Transpacific Resources Inc. is a mineral
exploration and development company. It owns properties in the
Kirkland Lake and Sudbury areas of Northern Ontario, which have
shown the presence of platinum and palladium. Transpacific
exercised its option to acquire up to 25% of the Toronto based
high tech company Matias Corp.
New Securities Fraud Cases
ALLOS THERAPEUTICS: Weinstein Kitchenoff Lodges Securities Suit
---------------------------------------------------------------
The law firm of Weinstein Kitchenoff Scarlato Karon & Goldman
Ltd. initiated a securities class action on behalf of purchasers
of Allos Therapeutics Inc publicly traded securities between 29
May 2003 and 3 May 2004.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated there under. Specifically the complaint alleges that
Allos misled the investing public by issuing a series of
materially false and misleading statements highlighting the
purported efficacy of the company's radiation sensitizer RSR13
(Efaproxiral) for the treatment of brain metastases in patients
with breast cancer, as well as the likelihood that this drug
would receive approval from the US Food and Drug Administration
(FDA).
On 30 Apr 2004 and 3 May 2004, it was announced by the Oncologic
Drugs Advisory Committee (ODAC) of the FDA that it concluded by
a 16-1 vote to recommend that the FDA not approve Efaproxiral.
In recommending rejection of Efaproxiral, the ODAC found that,
"the evidence of drug efficacy needs to be much stronger to be
convincing."
As a result of this announcement, the price of Allos shares fell
$2.09, or 45% to close at $2.55 on extraordinary volume. Any one
who bought Allos publicly traded securities between 29 May 2003
and 3 May 2004 and wishing to serve as lead plaintiff, must file
a request with the Court no later than 19 Jul 2004.
For more details, visit this link: http://www.wkskg.com/
BISYS GROUP: Milberg Weiss Lodges Securities Lawsuit in S.D. NY
---------------------------------------------------------------
The law firm of Milberg Weiss Bershad & Schulman LLP initiated a
securities class action which was filed on May 27, 2004, on
behalf of purchasers of the securities of the Bisys Group, Inc.
(NYSE: BSG) between October 23, 2000 and May 17, 2004,
inclusive, seeking to pursue remedies under the Securities
Exchange Act of 1934.
The action is pending in the United States District Court for
the Southern District of New York, against defendants Bisys,
Dennis R. Sheehan, Andrew C. Corbin, Lynn J. Magnum and James L.
Fox.
The complaint alleges that during the Class Period defendants'
publicly disseminated results of Bisys' operations and financial
condition contained artificially inflated revenues, assets and
income. Such results were not prepared or reported in accordance
with Generally Accepted Accounting Principles and deceived
investors as to the Company's true performance, thereby
artificially inflating the price of Bisys securities during the
Class Period.
On May 17, 2004, after the close of ordinary trading, Bisys
announced that it would be restating "its financial results for
each of the fiscal years ended June 30, 2003, 2002 and 2001, as
well as its interim results for fiscal 2004," to account for a
$70 million to $80 million adjustment to its previously reported
commissions receivable in its life insurance division. In
response to this announcement, the price of Bisys common stock
dropped, closing at $12.97 on May 18, 2004, down from a high of
$14.50 on May 17 on unusually heavy trading volume.
For more details, contact Steven G. Schulman, Peter E. Seidman
or Andrei V. Rado by One Pennsylvania Plaza, 49th fl., New York,
NY, 10119-0165 by Phone: (800) 320-5081 by E-Mail:
sfeerick@milbergweiss.com or visit their Web Site:
http://www.milbergweiss.com
LEXAR MEDIA: Schiffrin & Barroway Lodges Securities Suit in CA
--------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a securities
class action in the United States District Court for the
Northern District of California on behalf of all purchasers of
the common stock of Lexar Media Inc., (Nasdaq:LEXR) from July
17, 2003 through April 16, 2004 inclusive.
The complaint charges that Lexar, Eric Stang, and Brian McGee
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
17, 2003 and April 16, 2004. More specifically, the Complaint
alleges that the Company failed to disclose and misrepresented
the following material adverse facts, which were known to
defendants or recklessly disregarded by them:
(1) that the Company underestimated the impact and the
timing of competitive pricing moves in the flash memory
market;
(2) that the Company's preferential supply relationship
with Samsung failed to insulate Lexar from fluctuations
in pricing and availability of flash memory, which
negatively affected the Company's product margins; and
(3) the Company lacked sufficient royalty income to offset
product gross margins pressure.
On April 15, 2004, Lexar reported financial results for the
first quarter ended March 31, 2004. After several quarters of
relatively stable average selling prices, second quarter price
declines were sizeable. These declines were occurring sooner
than Lexar had previously anticipated. News of this shocked the
market. Shares of Lexar fell $5.03 per share or 32.56 percent on
April 16, 2004, to close at $10.42 per share.
For more information contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. or Stuart L. Berman, Esq.) by Mail: Three Bala Plaza
East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706
or 1-610-667-7706 by E-Mail: info@sbclasslaw.com
SALTON INC.: Anatoly Weiser Initiates Securities Suit in N.D. IL
----------------------------------------------------------------
The Law Offices Of Anatoly Weiser initiated a securities class
action on behalf of shareholders who purchased the common stock
of Salton, Inc. (NYSE:SFP) between November 11, 2002 and May 11,
2004, inclusive. The lawsuit was filed in the United States
District Court for the Northern District of Illinois, Eastern
Division.
The complaint alleges that defendants violated sections 10(b)
and 20(a) of the Exchange Act, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations
to the market during the Class Period that had the effect of
artificially inflating the market price of the Company's
securities
For more details, contact the Law Offices Of Anatoly Weiser by
Phone: (877) 736-5411 by Fax: (858) 225-0838 or by E-Mail:
info@classlawsuit.com
SMITH BARNEY: Milberg Weiss Lodges Securities Suit in S.D. NY
-------------------------------------------------------------
Milberg Weiss Bershad & Schulman LLP initiated a securities
class action and derivative lawsuit filed on behalf of
purchasers and holders of the securities of the Smith Barney and
Salomon Brothers families of funds owned and operated by
Citigroup Inc. (NYSE:C), and certain of its subsidiaries and
affiliates, between March 22, 1999 and March 22, 2004, inclusive
and on behalf of the Funds, seeking to pursue remedies under the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Advisers Act of 1940, the Investment Company Act of
1940 and the common law.
The Funds, and the symbols for the respective Funds named below,
are as follows:
(1) Salomon Brothers All Cap Value Fund (Sym: SUBAX, SUBBX,
SUBZX)
(2) Salomon Brothers Balanced Fund (Sym: STRAX, STRBX,
STRCX)
(3) Salomon Brothers California Tax Free Bond Fund (Sym:
CCAIX, SCUBX, SCULX)
(4) Salomon Brothers Capital Fund (Sym: SCCAX, SPABX,
SACPX, SCCCX)
(5) Salomon Brothers High Yield Bond (Sym: SAHYX, SBHYX,
SHYOX, SHYCX)
(6) Salomon Brothers International Equity Fund (Sym: SAIEX,
SAIBX, SAICX)
(7) Salomon Brothers Investors Value Fund (Sym: SINAX,
SBINX, SAIFX, SINOX)
(8) Salomon Brothers Large Cap Growth Fund (Sym: SLCAX,
SALBX, SALCX)
(9) Salomon Brothers Mid Cap Fund (Sym: SMDAX, SMDBX,
SMDZX)
(10) Salomon Brothers National Tax Free Bond Fund (Sym:
CFNIX, SNABX, SNALX)
(11) Salomon Brothers New York Tax Free Bond Fund (Sym:
CFTNX, SNFBX, SNFLX)
(12) Salomon Brothers SB Adjustable Rate Income Fund (Sym:
SJRAX, SJRBX, SJRZX)
(13) Salomon Brothers SB Capital and Income Fund (Sym:
SOLAX, SOLBX, SOLZX)
(14) Salomon Brothers SB Convertible Fund (Sym: SVEAX,
SVEBX, SCEZX)
(15) Salomon Brothers SB Growth & Income Fund (Sym: SSWAX,
SSWBX, SSWZX)
(16) Salomon Brothers Short/Intermediate U.S. Government
Fund (Sym: SUSAX, SUSBX, SUSCX)
(17) Salomon Brothers Small Cap Growth (Sym: SASMX, SBSMX,
SCSMX)
(18) Salomon Brothers Strategic Bond Fund (Sym: SSTAX,
SBSBX, SSTCX)
(19) Smith Barney Aggressive Growth Fund (Sym: SHRAX, SAGBX,
SAGCX)
(20) Smith Barney All Cap Growth and Value Fund (Sym: SPAAX,
SPBBX, SPBLX)
(21) Smith Barney Appreciation Fund (Sym: SHAPX, SAPBX,
SAPCX, SAPYX)
(22) Smith Barney Arizona Municipals Fund (Sym: SLAZX,
SAZBX, SAZLX)
(11) Smith Barney Balanced Portfolio (Sym: SBBAX, SCBBX,
SCBCX)
(12) Smith Barney California Municipals Fund (Sym: SHRCX,
SCABX, SCACX)
(13) Smith Barney Classic Values Fund (Sym: SCLAX, SCLBX,
SCLLX)
(14) Smith Barney Conservative Portfolio (Sym: SBCPX, SBCBX,
SBCLX)
(15) Smith Barney Diversified Large Cap Growth Fund (Sym:
CFLGX, CLCBX, SMDLX)
(16) Smith Barney Diversified Strategic Income Fund (Sym:
SDSAX, SLDSX, SDSIX)
(17) Smith Barney Dividend and Income Fund (Sym: SUTAX,
SLSUX, SBBLX)
(18) Smith Barney Financial Services Fund (Sym: SBFAX,
SBFBX, SFSLX)
(19) Smith Barney Florida Portfolio (Sym: SBFLX, FLABX,
SFLLX)
(20) Smith Barney Fundamental Value Fund (Sym: SHFVX, SFVBX,
SFVCX)
(21) Smith Barney Georgia Portfolio (Sym: SBGAX, SBRBX,
SGALX)
(22) Smith Barney Global All Cap Growth and Value Fund (Sym:
SPGAX, SPGGX, SPGLX)
(23) Smith Barney Global Government Bond Portfolio (Sym:
SBGLX, SBGBX, SGGLX)
(24) Smith Barney Global Portfolio (Sym: CAGAX, CAGBX,
SGPLX)
(25) Smith Barney Government Securities Fund (Sym: SGVAX,
HGVSX, SGSLX)
(26) Smith Barney Group Spectrum Fund (Sym: SGSAX, SGSBX,
SFTLX)
(27) Smith Barney Growth Portfolio (Sym: SCGRX, SGRBX,
SCGCX)
(28) Smith Barney Hansberger Global Value Fund (Sym: SGLAX,
SGLBX, SGLCX)
(29) Smith Barney Health Sciences Fund (Sym: SBIAX, SBHBX,
SBHLX)
(28) Smith Barney High Growth Portfolio (Sym: SCHAX, SCHBX,
SCHCX)
(29) Smith Barney High Income Fund (Sym: SHIAX, SHIBX,
SHICX)
(30) Smith Barney Income Portfolio (Sym: SCAAX, SCIAX,
SCILX)
(31) Smith Barney Intermediate Maturity CA Municipals Fund
(Sym: ITCAX, STDBX, SIMLX)
(32) Smith Barney Intermediate Maturity NY Municipals Fund
(Sym: IMNYX, SNMBX, SINLX)
(33) Smith Barney International All Cap Growth Portfolio
(Sym: SBIEX, SBIBX, SBICX)
(34) Smith Barney International Large Cap Fund (Sym: CFIPX,
SILCX, SILLX)
(35) Smith Barney Investment Grade Bond Fund (Sym: SIGAX,
HBDIX, SBILX)
(36) Smith Barney Large Cap Core Fund (Sym: GROAX, GROBX,
SCPLX)
(37) Smith Barney Large Cap Growth and Value Fund (Sym:
SPSAX, SPSBX, SPSLX)
(38) Smith Barney Large Cap Value Fund (Sym: SBCIX, SBCCX,
SBGCX)
(39) Smith Barney Large Capitalization Growth Fund (Sym:
SBLGX, SBLBX, SLCCX, SBLYX)
(40) Smith Barney Limited Term Portfolio (Sym: SBLTX, STMBX,
SMLLX)
(41) Smith Barney Managed Governments Fund (Sym: SHMGX,
MGVBX, SMGLX)
(42) Smith Barney Managed Municipals Fund (Sym: SHMMX,
SMMBX, SMMCX)
(43) Smith Barney Massachusetts Municipals Fund (Sym: SLMMX,
SMABX, SMALX)
(44) Smith Barney Mid Cap Core Fund (Sym: SBMAX, SBMDX,
SBMLX, SMBYX)
(45) Smith Barney Municipal High Income Fund (Sym: STXAX,
SXMT, SMHLX)
(46) Smith Barney National Portfolio (Sym: SBBNX, SBNBX,
SBNLX)
(47) Smith Barney New Jersey Municipals Fund (Sym: SHNJX,
SNJBX, SNJLX)
(48) Smith Barney New York Portfolio (Sym: SBNYX, SMNBX,
SBYLX)
(49) Smith Barney Oregon Municipals Fund (Sym: SHORX, SORBX,
SORLX)
(50) Smith Barney Pennsylvania Portfolio (Sym: SBPAX, SBPBX,
SPALX)
(51) Smith Barney S & P 500 Index Fund (Sym: SBSPX)
(52) Smith Barney SB Adjustable Rate Income Fund (Sym:
ARMZX, ARMBX, ARMGX)
(53) Smith Barney SB Capital and Income Fund (Sym: SOPAX,
SOPTX, SBPLX)
(54) Smith Barney SB Convertible Fund (Sym: SCRAX, SCVSX,
SMCLX, SCVYX)
(55) Smith Barney SB Growth & Income Fund (Sym: GRIAX,
GRIBX, SGAIX)
(56) Smith Barney Short Duration Municipal Income Fund (Sym:
SHDAX, SHDBX, SHDLX)
(57) Smith Barney Short-Term Investment Grade Bond Fund
(Sym: SBSTX, SHBBX, SSTLX)
(58) Smith Barney Small Cap Core Fund (Sym: SBDSX, SBDBX,
SBDLX)
(59) Smith Barney Small Cap Growth Fund (Sym: SBSGX, SBYBX,
SBSLX)
(60) Smith Barney Small Cap Growth Opportunities Fund (Sym:
CFSGX, SMOBX, SGOLX)
(61) Smith Barney Small Cap Value Fund (Sym: SBVAX, SBVBX,
SBVLX)
(62) Smith Barney Social Awareness Fund (Sym: SSIAX, SESIX,
SESLX)
(63) Smith Barney Technology Fund (Sym: SBTAX, SBTBX, SBQLX)
(64) Smith Barney Total Return Bond Fund (Sym: TRBAX, TRBBX,
SBTLX)
(65) Smith Barney U.S. Government Securities Fund (Sym:
SBCGX, SBUBX, SBULX)
The action, numbered 04-CV-4055 is pending in the United States
District Court for the Southern District of New York against
defendants Salomon Brothers Asset Management, Inc., Smith Barney
Fund Management LLC, Citigroup Asset Management, Citigroup
Global Markets, Inc. (f/k/a Salomon Smith Barney Inc.) ("SSB"),
Citigroup Global Markets Holdings Inc., Citigroup, Inc., R. Jay
Gerken, Dwight B. Crane, Joseph J. McCann, Burt N. Dorsett,
Cornelius C. Rose, Jr., Elliot S. Jaffe, each of the Funds and
the registrants of the Funds. The Honorable Naomi Reice Buchwald
is the Judge presiding over the action.
The Complaint alleges that defendants violated Sections 11,
12(a)(2) and 15 of the Securities Act of 1933; Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder; Sections 34(b), 36(b) and 48(a) of the
Investment Company Act of 1940; Section 206 of the Investment
Advisers Act of 1940; and the common law.
The Complaint charges that defendants engaged in an unlawful and
deceitful course of conduct designed to improperly financially
advantage defendants to the detriment of plaintiff and the other
members of the Class. The complaint alleges that defendants, in
clear contravention of their disclosure obligations and
fiduciary responsibilities, failed to properly disclose that SSB
had been aggressively pushing its sales personnel to sell Smith
Barney and Salomon Brothers funds by creating various
undisclosed incentives for brokers to sell the proprietary
funds.
In addition, according to the complaint, unbeknownst to
investors, the investment advisers to the Funds (Citigroup Asset
Management, SSB, Salomon Brothers Asset Management, Inc. and
Smith Barney Fund Management LLC) paid excessive commissions,
directly or indirectly, to SSB, the broker dealer, which came
directly out of the Funds' assets, as payments to SSB for its
steering clients towards the proprietary funds. The investment
advisers profited from this scheme by earning increased
management fees, while Citigroup Global Markets benefited from
increased commissions and Citigroup profited as the ultimate
parent of Citigroup Global Markets and the investment advisers.
The clear losers were plaintiff and the other members of the
Class, whose assets were diverted to line defendants' pockets
without any benefit to them whatsoever.
For more details, contact Steven G. Schulman, Kim E. Levy, Peter
E. Seidman or Michael R. Reese by Mail: One Pennsylvania Plaza,
49th Fl., New York, NY 10119-0165 by Phone: (800) 320-5081 or E-
Mail: sfeerick@milbergweiss.com or visit their Web site:
http://www.milbergweiss.com
*********
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Resnick, Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
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