/raid1/www/Hosts/bankrupt/CAR_Public/040702.mbx
C L A S S A C T I O N R E P O R T E R
Friday, July 2, 2004, Vol. 6, No. 129
Headlines
AT&T WIRELESS: Reaches Settlement For CO Consumer Fraud Lawsuit
BANC ONE: Reaches $50M Settlement in SEC Market Timing Lawsuit
BENZENE LITIGATION: GCIU Seeks Plaintiffs To Join Injury Lawsuit
COMMERCE BANCORP: Scott + Scott Investigates Fraud Allegations
CALIFORNIA: FDA Issues Warning, Finds Counterfeit Viagra in CA
EMERSON RADIO: Plaintiffs Launch Consolidated NJ Securities Suit
GEEK SECURITIES: Indicted For Securities Fraud in FL Lawsuit
HAMILTON BANCORP: Attorney's Office Indicts Ex-Execs For Fraud
HEARTLAND ADVISORS: Judge To Rule On $1M Mutual Funds Settlement
HOUSEHOLD INTERNATIONAL: Discovery Proceeds in IL ERISA Lawsuit
IQ SOFTWARE: Securities Settlement Hearing Set September 7, 2004
ISLE OF CAPRI: NV Court To Decide on Suit Certification in 2005
JP MORGAN: Refuses To Settle NY Comptroller's Bondholder Lawsuit
JP MORGAN: Bank One Merger Challenged By Shareholder Fraud Suit
JSC SURGUTNEFTEGAZ: Harvard University Seeks Arbitration in NY
KB HOME: Homeowners Launch Suit Over Excessive Association Dues
KENTUCKY: Couples Sue Oldham County Over 19% School-Tax Increase
MASSMUTUAL: NJ Court Approves Sales Practices Lawsuit Settlement
MICHIGAN: Residents File Property Suit Over Flawed Sewer System
MICROSOFT CORPORATION: Appeals Court Upholds DOJ Antitrust Pact
NEW YORK: Schenectady County Jail Faces Suit Over Strip-Searches
SIEBEL SYSTEMS: SEC Files NY Suit Over Regulation FD Violations
SPSS INC.: Plaintiff Deadline in IL Securities Fraud Lawsuit Set
ST. PAUL COMPANIES: Stock Settlement Hearing Set August 12, 2004
STARLINK LOGISTICS: Farmers Soon To Receive Share in Settlement
SUTTER HEALTH: Patients Launch Suit For Unfair Trade Practices
UNITED RETAIL: Plaintiffs File Amended Overtime Wage Suit in CA
VIRTUAL CASH: SEC Imposes Injunctive Relief, Fines V. Traders
VIVENDI UNIVERSAL: Programmers Launch Overtime Wage Suit in CA
WAL-MART STORES: 4 Women File Declarations of Sex Bias Charges
Asbestos Alert
ASBESTOS LITIGATION: AFG Completes Transport Insurance Purchase
ASBESTOS LITIGATION: Entrx, Metalclad Agree To Release Insurer
ASBESTOS LITIGATION: Hanson Received 10,000 New Claims for 2004
ASBESTOS LITIGATION: PPG Notes Value Changes In Stock For Trust
ASBESTOS LITIGATION: Rohm & Haas Co. Reserves For Premises Cases
ASBESTOS LITIGATION: Sealed Air Cites Lower Asbestos Legal Fees
ASBESTOS LITIGATION: Union Carbide Corp., Anchem Battling Suits
ASBESTOS LITIGATION: UIC Asbestos Reserve Tagged At $31.541M
ASBESTOS LITIGATION: WTM Discloses 71 Million Krona Of Reserves
ASBESTOS ALERT: Aon Corporation Indemnities Amount To $19M
ASBESTOS ALERT: KBR To Settle Claims Through Reorganization Plan
New Securities Fraud Cases
ALLIANCE GAMING: Wolf Haldenstein Lodges Securities Suit in NV
BISYS GROUP: Wolf Haldenstein Lodges Securities Suit in S.D. NY
CANADIAN SUPERIOR: Siskind Cromarty Lodges Securities Fraud Suit
HANGER ORTHOPEDIC: Schiffrin & Barroway Lodges NY Stock Suit
LEHMAN ABS: Abbey Gardy Lodges Securities Fraud Suit in S.D. NY
LEXAR MEDIA: Lerach Coughlin Lodges Securities Lawsuit in N.D CA
POZEN, INC.: Schiffrin & Barroway Files Amended Stock Suit in NC
*********
AT&T WIRELESS: Reaches Settlement For CO Consumer Fraud Lawsuit
---------------------------------------------------------------
AT&T Wireless Services Inc. reached a settlement for the
multimillion-dollar class action filed by subscribers, alleging
that delayed roaming charges caused subscribers to be penalized
for exceeding allowable minutes in their service plans, RCR
Wireless News Reports.
A hearing to approve the settlement is set for September 22 in
U.S. District Court in Denver, Colorado. Both sides have agreed
not to comment publicly on the settlement.
However, AT&T Wireless Services-which is seeking approval to be
purchased by Cingular Wireless L.L.C. for $41 billion-denies any
wrongdoing.
"When a wireless customer roams on another carrier's network,
the call may be billed in a subsequent billing cycle. This is a
common industry practice caused by the time it takes for
reporting between carriers. The lawsuit took issue with this
practice. We firmly believe we did nothing wrong. We decided
that the resources we would spend on continued litigation are
better spent offering our customers a settlement," Rochelle
Cohen, a spokeswoman for AT&T Wireless told RCR Wireless News.
BANC ONE: Reaches $50M Settlement in SEC Market Timing Lawsuit
--------------------------------------------------------------
The Securities and Exchange Commission settled administrative
and cease-and-desist proceedings against Banc One Investment
Advisors Corporation (BOIA), a registered investment adviser
based in Columbus, Ohio, and Mark A. Beeson, age 46, of
Westerville, Ohio, former President and CEO of One Group Mutual
Funds (One Group) and Senior Managing Director of BOIA.
The Commission found that BOIA violated, and Beeson aided and
abetted and caused violations of, the federal securities laws
by:
(1) allowing excessive short-term trading in One Group
funds by hedge-fund manager Edward J. Stern in the hope
of attracting additional business, which created a
conflict of interest because the trading increased
BOIA's advisory fees but was potentially harmful to One
Group funds;
(2) failing to charge Stern redemption fees as required by
One Group's international-fund prospectuses when other
investors were charged the redemption fees;
(3) having no written procedures in place to prevent the
nonpublic disclosure of One Group portfolio holdings
and improperly providing confidential portfolio
holdings to Stern when other shareholders were not
provided the same information; and
(4) causing One Group funds to participate in joint
transactions (a BOIA affiliate loaned money to Stern
for the purpose of market-timing), raising a conflict
of interest.
The Commission also found, among other things, that BOIA allowed
excessive short-term trading in One Group funds by a Michigan
market timer in violation of fund prospectuses and failed to
collect required redemption fees from a Texas hedge fund.
The Commission ordered BOIA to pay disgorgement of $10 million
and a civil penalty of $40 million and ordered Beeson to pay a
civil penalty of $100,000. BOIA also consented to a cease-and-
desist order and a censure, and agreed to undertake certain
compliance and mutual-fund governance reforms. In addition,
Beeson consented to a bar from the mutual-fund industry with the
right to reapply in two years, and a three-year prohibition from
employment with any investment company and from serving as an
officer or director of an investment adviser.
In the Order, the Commission found that:
(i) The One Group's fund prospectuses stated that One Group
restricted excessive exchange activity in all One Group
funds. BOIA enforced those provisions. But despite the
prospectuses' language, Beeson entered into an
agreement with Stern through which Stern executed
approximately 300 exchange transactions within certain
One Group funds. This agreement was made in the hope
that it would lead to additional business from Stern
for various BOIA affiliates. The transactions, which
occurred between June 2002 and May 2003, earned Stern a
profit of approximately $5.2 million.
(ii) In connection with transactions in One Group
international funds, BOIA and Beeson failed to charge
Stern approximately $4 million in redemption fees, as
required by those funds' prospectuses.
(iii) Despite the language of the One Group's fund
prospectuses, from June 1999 to December 2001, BOIA
allowed a Michigan market timer to execute
approximately 100 exchange transactions in One Group
international funds, resulting in a profit to the
market timer of approximately $1.24 million.
(iv) In March 2003, BOIA allowed a Texas hedge fund to
execute two exchange transactions in One Group
international funds without collecting approximately
$840,000 in redemption fees required by the
prospectuses.
(v) Beeson provided listings of the confidential portfolio
holdings of several One Group funds to Stern when that
information was not provided to the public, to the
possible detriment of the funds and their shareholders.
(vi) BOIA provided listings of the confidential portfolio
holdings of many One Group funds to favored clients
(including Stern), prospective clients, and consultants
when that information was not provided to the public,
to the possible detriment of the funds and their
shareholders.
(vii) BOIA and Beeson caused certain One Group funds to enter
into joint arrangements whereby Bank One loaned money
to Stern with the express understanding that the loan
proceeds would be invested in One Group funds.
In addition, Bank One loaned money to a Michigan market-timer to
market-time mutual funds. Bank One earned interest on those
loans and BOIA generated mutual-fund sales and associated fees
by allowing approved timing activity in One Group funds. By
contrast, the affected One Group funds obtained little or no
benefit from this unauthorized activity.
The Commission's Order further finds that BOIA willfully
violated, and Beeson aided and abetted and caused violations of,
Sections 204A, 206(1), and 206(2) of the Investment Advisers Act
and Sections 17(d) and 34(b) of the Investment Company Act and
Rule 17d-1 thereunder, and requires them to cease and desist
from violating these provisions. BOIA and Beeson consented to
the entry of the Commission's Order without admitting or denying
the findings.
BENZENE LITIGATION: GCIU Seeks Plaintiffs To Join Injury Lawsuit
----------------------------------------------------------------
The Graphic Communications International Union (GCIU) is seeking
plaintiffs to join a proposed class action over the serious
health conditions its members face due to exposure to benzene.
The GCIU represents U.S. and Canadian workers in all craft and
skill areas in the printing and publishing industry. "For
years, many of us have suspected that the saturation of our
working environment with dangerous products may be a
contributing factor in serious health conditions experienced by
GCIU members," the union said in a statement.
The union also asserted that while additional medical studies
are needed with respect to some chemicals and their link to
certain diseases, there is one group of diseases already
undeniably associated with substantial exposure to benzene,
which are certain groups of leukemia.
The union called on present or other GCIU active or retired
members to join a possible legal cause of action against the
manufacturers and/or distributors of benzene in their workplace.
The statement asserts, "Individuals suffering from leukemia, or
in the case of death, their heirs, should seek legal advice
immediately. Time is of the essence. You may waive your legal
rights by waiting. The GCIU has consulted with a group of
attorneys who handle such toxic tort cases nationwide."
The statement further stated that interested parties can call 1-
866-386-8391 or contact:
(1) James Farragut of the Farragut Law Firm, Pascagoula,
Mississippi,
(2) Stephen L. Shackelford, Esquire, Attorney at Law,
Jackson, Mississippi,
(3) Tom B. Scott, III, Esquire of Scott & Scott, Jackson,
Mississippi,
(4) Jeffrey A. Varas, Esquire of the Varas Law Firm,
Hazlehurst, Mississippi
The statement told potential plaintiffs, "If you have any
further questions about leukemia, or any other work related
illnesses, caused by possible exposure to chemicals, the above-
named attorneys will be pleased to speak with you. There is no
charge for the telephone call or advice. Nor is there any
obligation on you part. These are independently operating
attorneys with whom you will deal with directly. If you agree to
retain them, they are your attorneys and do not work for GCIU."
For more information, visit the Website: http://www.gciu.org.
COMMERCE BANCORP: Scott + Scott Investigates Fraud Allegations
--------------------------------------------------------------
The law firm of Scott + Scott commenced an investigation into
Commerce Bancorp, Inc. ("Commerce") (NYSE: CBH) with regard to
the news reported on alleged illegal behavior at the Company as
it relates to the U.S. securities fraud laws.
The investigation focuses upon the Company's failure to disclose
that two executives Glenn Holck and Stephen Umbrell were
participating in bid-rigging in order to win underwriting awards
and gain banking business for Commerce Bank from the City of
Philadelphia. Corruption indictments were handed down by U.S.
Attorney Patrick L. Meehan against Holck, the president of the
Cherry Hill, N.J., company, and Umbrell, the regional vice
president of Commerce Bank in Philadelphia.
In all there were indictments against 12 individuals, including
the former Philadelphia Treasurer, Corey Kemp, and Ronald A.
White, an attorney. Two former J.P. Morgan Chase & Co. bankers
were also indicted. Holck and Umbrell are charged with
conspiracy, eight counts of wire fraud, and one count of mail
fraud. Charles LeCroy, a former managing director of the
Southeast regional office of JPMorgan Chase, and Anthony C.
Snell, a former vice president of the company, are charged with
two counts each of wire fraud. Denis Carlson, a senior vice
president of the Philadelphia investment banking firm Janney
Montgomery Scott, was charged with two counts of making false
statements to the Federal Bureau of Investigation.
Holck and Umbrell could face a maximum of 185 years in prison
each and $2.5 million in fines if convicted. LeCroy and Snell
could face a maximum of 40 years in prison and $500,000 in fines
if convicted.
Upon this news Commerce shares have lost 15% of their value.
For more details, contact Scott + Scott, LLC by Phone:
800/404-7770 (EDT) or 800/332-2259 (PDT) or 860/537-3818
(Connecticut) or 619/233-4565 (California) or by E-mail:
nrothstein@scott-scott.com or
CommerceBancorpInvestigation@scott-scott.com
CALIFORNIA: FDA Issues Warning, Finds Counterfeit Viagra in CA
--------------------------------------------------------------
FDA is alerting pharmacies and the public of a small number of
confirmed reports involving counterfeit Viagra (sildenafil
citrate) sold in two California pharmacies. Both FDA and Pfizer,
Inc. of Groton, CT, the manufacturer of the legitimate drug
Viagra, are analyzing the counterfeit product to determine its
true composition and whether it poses any health risks.
To date no injuries have been reported in connection with this
problem and the counterfeit products have only been found in
pharmacies in Glendale and Fresno, California.
It is important to note that the concern over these counterfeit
drugs in no way applies to real Viagra tablets, which are
formulated and manufactured in strict compliance with FDA's
standards.
Pfizer and FDA are providing pharmacists and the public with
information on how to identify counterfeit Viagra packaging and
tablets. The counterfeit drugs bear the lot number 3023803 with
an expiration date of 1 MAR 06 (this lot number and date were
used on legitimate Viagra product distributed between July 1 and
July 18, 2003) and resemble real Viagra tablets in terms of
their general size, shape, color and debossing (imprints). Yet
several significant deviations are evident between the
counterfeit and real drugs these differences include a different
debossing font, more pronounced tablet edges, and the lighter
blue film-coat. Consumers can also refer to the comparative
photos included with Pfizer's Dear Pharmacist letter, posted on
the company's Website by using the link below.
Consumers who have Viagra at home and may have questions about
its legitimacy can reference the above websites or contact the
dispensing pharmacist. Pharmacists and consumers who have
counterfeit Viagra should contact their local FDA office.
For more details, contact the FDA - Media Inquiries by Phone:
301-827-6242 or Consumer Inquiries by Phone: 888-INFO-FDA or
visit the FDA Web site: http://www.fda.orgor visit the Pfizer
Web site:
http://www.pfizer.com/subsites/counterfeit_importation/mn_pharma
cist_viagra.html.
EMERSON RADIO: Plaintiffs Launch Consolidated NJ Securities Suit
----------------------------------------------------------------
Plaintiffs filed a consolidated amended securities class action
against Emerson Radio Corporation in the United States District
Court for the District of New Jersey. The suit also named as
defendants Geoffrey Jurick, Kenneth Corby, John Raab and Jerome
Farnum.
The suit was filed on behalf of purchasers of the Company's
publicly traded securities who bought shares between January 29,
2003 and August 12, 2003. The suit is styled "In Re Emerson
Radio Corp. Securities Litigation, 03cv4201 (JLL)." The Lead
plaintiff was appointed and co-lead counsel and co-liaison
counsel were approved by the Court in the Consolidated Action.
Generally, the Amended Complaint alleges that the Company and
the Individual Defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
there under, by:
(1) issuing certain positive statements during the Class
Period regarding the Company's ability to replace lost
revenues attributable to the Company's Hello Kitty
license and
(2) omitting to disclose that the Company suffered
allegedly soured relationships with the Company's
largest retail customers.
The Amended Complaint further alleges that these statements were
materially false and misleading when made because the Company
allegedly misrepresented and omitted certain adverse facts which
then existed and disclosure of which was necessary to make the
statements not false and misleading.
GEEK SECURITIES: Indicted For Securities Fraud in FL Lawsuit
------------------------------------------------------------
Geek Securities, Inc., Geek Advisors, Inc., Kautilya "Tony"
Sharma, and Neal R. Wadhwa were indicted on criminal charges
brought by the U.S. Attorney for the Southern District of
Florida. Geek Securities, Geek Advisors, Sharma and Wadhwa were
named in a thirty-six count second superseding indictment
charging, among other things, a mutual fund "market timing" and
"late trading" scheme. If convicted, the defendants face
penalties that range from 5 to 20 years imprisonment as to each
count of the indictment. The defendants also face fines if
convicted on any of the charged counts.
On June 4, the Securities and Exchange Commission filed a civil
enforcement action against Geek Securities, Geek Advisors,
Sharma, and Wadhwa alleging antifraud violations of the
securities laws as a result of their market timing and late
trading activities. The SEC's action against the defendants
remains pending. [SEC v. Geek Securities, Inc., Geek Advisors,
Inc., et al., Kautilya "Tony" Sharma, and Neal R. Wadhwa Civil
Action No. 04-80525 Paine/Johnson (SD Fla.)]; [U.S. v. Kautilya
Sharma a/k/a "Tony Sharma", Neal Wadhwa, Geek Securities, Inc.,
Geek Advisors, Inc., et al., Criminal Action No. 03-801460CR-
Marra/Seltzer (SD FL)] (LR-18767)
HAMILTON BANCORP: Attorney's Office Indicts Ex-Execs For Fraud
--------------------------------------------------------------
The Securities and Exchange Commission and the U.S. Attorney for
the Southern District of Florida announced that on June 22,
2004, the U.S. Attorney's Office issued a 42-count federal
indictment charging Eduardo Masferrer, Juan Carlos Bernace and
John M.R. Jacobs with, among other things, conspiracy, wire
fraud, securities fraud and making false filings with the
Commission. Masferrer was also charged with insider trading.
Masferrer, Bernace and Jacobs are the former senior executive
officers of Hamilton Bancorp, Inc (Hamilton). If convicted,
defendants face a maximum term of imprisonment of thirty (30)
years and a fine of up to $1 million on each wire fraud count, a
maximum term of ten (10) years imprisonment and a fine of $1
million on each securities fraud count, and a maximum term of
five years' imprisonment and a fine of up to $250,000 for each
count of conspiracy and the other charges contained in the
Indictment.
The Indictment charges that in 1998 and 1999, Masferrer,
Bernace, and Jacobs engaged in swap transactions to hide
Hamilton's losses, including $22 million-plus losses in 1998,
and falsely accounted for the transactions to make it appear
that no losses had been incurred. As a result, the Indictment
alleges that Masferrer, Bernace, and Jacobs fraudulently
inflated the reported results of operations and financial
condition of Hamilton Bancorp and defrauded the investing public
and bank and securities regulators, so that they would unjustly
enrich and benefit themselves through higher salaries, bonuses,
and stock options.
The indictment derives from the same activity that led to the
Commission's filing of its complaint against Masferrer, Bernace
and Jacobs in the U.S. District Court for the Southern District
of Florida on Sept. 25, 2003. The Commission's complaint alleged
that, as a result of the conduct described above, the defendants
violated the antifraud, reporting and books and records
provisions of the Securities Exchange Act of 1934. The
Commission sought permanent injunctions, officer and director
bars, disgorgement of ill-gotten gains, plus prejudgment
interest, and the imposition of civil money penalties against
the defendants. On April 6, 2004, the Court entered, with
Bernace's consent, a Final Judgment of Permanent Injunction and
Other Relief as to Bernace. The Judgment permanently enjoined
Bernace from violating the above provisions of the federal
securities laws, permanently barred Bernace from acting as an
officer or director of a public company, and ordered Berance to
pay a civil money penalty of $110,000 and disgorgement of ill-
gotten profits, plus prejudgment interest, in the amount of
$93,452.40. The Commission's case against Masferrer and Jacobs
continues to be litigated. [SEC v. Eduardo Masferrer, Juan
Carlos Bernace and John M.R. Jacobs, Case No. 03-22524-CIV-
JORDAN/Brown, USDC/SD FL] (LR-18772)
HEARTLAND ADVISORS: Judge To Rule On $1M Mutual Funds Settlement
----------------------------------------------------------------
A federal judge is set to rule on a $1 million settlement
between shareholders in two Heartland mutual funds and
Interactive Data Corporation, the company that helped Heartland
Advisors Inc. determine prices for bonds in the ill-fated funds,
Knight-Ridder/Tribune Business News reports.
In December, the Securities and Exchange Commission filed a
lawsuit accusing Heartland of intentionally mispricing the two
bond funds and alleged that company executives used inside
information to dump shares in those funds before they slashed
their value. The settlement with Interactive Data, formerly
known as Muller Data Corporation, involves as many as 11,000
Heartland bond fund shareholders who participated in a class
action suit.
There haven't been objections filed for the $1 million
settlement, which lawyers estimate will yield about 2 cents a
share for High-Yield shareholders and a penny a share for Short
Duration shareholders.
If US Judge J. P. Stadtmueller approves the settlement,
shareholders won't receive their money until the court finalizes
a settlement with PriceWaterhouseCoopers in order to minimize
administrative expenses, court documents said.
PriceWaterhouseCoopers was Heartland's accounting firm when it
marked down the value of the funds.
C. Oliver Burt III, the West Palm Beach, Fla.-based lead counsel
for the plaintiffs, said lawyers are seeking up to 25 percent of
the $1 million settlement in fees and as much as $65,000 in
expense reimbursements. The settlement hearing is scheduled for
June 30, 2004, 3:00 p.m. at the Federal Courthouse in Milwaukee.
For more details, contact C. Oliver Burt, III of Berman
DeValerio Pease Tabacco Burt & Pucillo by Mail: Northbridge
Centre, Suite 1701, 515 North Flagler Drive, West Palm Beach,
Florida 33401 (Palm Beach Co.) by Phone: 561-835-9400 by Fax:
561-835-0322 by E-mail: law@bermanesq.com or visit their Web
site: http://www.bermanesq.com/
HOUSEHOLD INTERNATIONAL: Discovery Proceeds in IL ERISA Lawsuit
---------------------------------------------------------------
Discovery has begun in the class action filed against Household
International, Inc. in the United States District Court for the
Northern District of Illinois, purporting to assert claims under
the Employee Retirement Income Security Act (ERISA) on behalf of
participants in the Household International Tax Reduction
Investment Plan. The suit is styled "In re Household
International, Inc. ERISA Litigation, Master File No. 02 C
7921."
The consolidated and amended complaint essentially alleges that
the Company and the Administrative and Investment Committee of
the Plan, breached their fiduciary duties to the Plan
participants and beneficiaries by investing in Household stock
and failing to disclose information to Plan participants. A
motion to dismiss the complaint was filed in June 2003. On
March 30, 2004, the Court granted in part, and denied in part,
the defendants' motion to dismiss the complaint.
The Court dismissed all claims alleging that some or all of the
defendants:
(i) breached their co-fiduciary obligations;
(ii) misrepresented the prudence of investing in Household
stock;
(iii) failed to disclose nonpublic information regarding
alleged accounting and lending improprieties; and
(iv) failed to provide other defendants with non-public
information.
The claims that remain essentially allege that some or all of
the defendants failed to prudently manage plan assets by
continuing to invest in, or provide matching contributions of,
Household stock.
IQ SOFTWARE: Securities Settlement Hearing Set September 7, 2004
----------------------------------------------------------------
The United States District Court for the Northern District of
Georgia - Atlanta Division will hold a fairness hearing for the
proposed settlement for the class action lawsuit filed against
IQ Software Corporation on behalf of all persons who purchased
the Company's common stock during the period from May 8, 1996
through and including February 3, 1997.
The Court has scheduled a fairness hearing to approve the
proposed settlement, which will be held on September 7, 2004,
Tuesday, Richard B. Russell Federal Bldg. and Courthouse, 75
Spring St., SW Atlanta, GA, 30303-3361.
For more details, contact IQ Software Corporation Securities
Litigation c/o The Garden City Group, Inc., Settlement
Administrator by Mail: P.O. Box 9000 #6131, Merrick, NY 11566-
9000 by Phone: 1-866-354-8013 or visit their Web site:
http://www.iqsoftwaresecuritieslitigation.com/
ISLE OF CAPRI: NV Court To Decide on Suit Certification in 2005
---------------------------------------------------------------
The United States District Court in Las Vegas, Nevada is
expected to decide on the appeal of the denial of class
certification to the lawsuit filed against one of Isle of Capri
Casino's subsidiaries and other manufacturers, distributors and
gaming operators, including many of the country's largest gaming
operators, sometime in 2005.
These gaming industry defendants are alleged to have violated
the Racketeer Influenced and Corrupt Organizations Act (RICO) by
engaging in a course of fraudulent and misleading conduct
intended to induce people to play their gaming machines based
upon a false belief concerning how those gaming machines
actually operate and the extent to which there is actually an
opportunity to win on any given play. The suit seeks
unspecified compensatory and punitive damages.
In June 2002, this district court denied the Motion for Class
Certification, but this decision has been appealed. Oral
arguments were heard in January 2004.
JP MORGAN: Refuses To Settle NY Comptroller's Bondholder Lawsuit
----------------------------------------------------------------
JP Morgan Chase refused to settle a class action filed by the
state comptroller of New York, over allegations that the
investment bank and 16 other firms defrauded bondholders during
the collapse of WorldCom, The Australian reports.
The suit, filed by New York State Comptroller Allan Hevesi,
alleges that the defendants knew about WorldCom's shaky finances
but did nothing to deter their clients from buying shares and
bonds. If the class action succeeds, thousands of bondholders
could share the proceeds as compensation for the money they lost
during the communications giant's collapse. JP Morgan faces the
biggest bill because it underwrote some 50 per cent of the bonds
involved in the lawsuit.
The banks were given 45 days to agree to a $US2.85 billion
settlement over the bond issuances, at the same day Mr. Hevesi
reached a landmark deal with Citigroup. The 45-day deadline
expired at midnight on Monday in New York and the 17 banks
refused to pay.
"The deal is now off the table," John Chartier, a spokesman for
Mr Hevesi said, according to the Australian. "We are going to
proceed with litigation."
JPMorgan and the other 16 banks involved declined to comment
about the refusal to reach a settlement. However, a source
close to the litigation said negotiations, although not cordial,
were continuing, the Australian states.
JP MORGAN: Bank One Merger Challenged By Shareholder Fraud Suit
---------------------------------------------------------------
The US$58 billion merger between JP Morgan Chase and Bank One
faces an obstacle in the form of a shareholder class action,
filed by prominent law firm Milberg Weiss Bershad & Schulman LLP
on behalf of JP Morgan's investors, FT.com reports.
An article on the merger printed in the New York Times over the
weekend spurred the suit. The article suggested that Jamie
Dimon, Bank One's chief executive, had offered to accept the
payment of no premium to the company's market value in exchange
for taking the helm of the combined group as soon as the deal
was completed, citing unnamed sources. However, Mr. Dimon and
William Harrison, JP Morgan's chief executive agreed that JP
Morgan would pay a 14 per cent premium, worth more than $7
billion at the time, in exchange for Mr. Harrison retaining the
top job for two years.
The suit claims that Mr. Harrison failed to tell investors he
had the chance to pay $7 billion less for the Chicago Bank. The
suit primarily alleges that the terms of the discussions over
price and leadership between Mr. Harrison and Mr. Dimon should
have been disclosed in the merger documents. Shareholders also
claim that Mr. Harrison breached his "duty of loyalty" to them.
Joseph Gielata, a partner at Milberg Weiss in Delaware, where
the legal action was started, told FT.com shareholders might not
have voted in favour of the deal "had they known that (Mr.
Harrison) had the opportunity to seal the merger without a
premium."
Adam Castellani, a JP Morgan spokesman, told FT.com, "This
lawsuit is baseless and without merit. It should be noted that
this transaction was overwhelmingly approved by shareholders of
both companies and has been well received by the market and
analysts."
JSC SURGUTNEFTEGAZ: Harvard University Seeks Arbitration in NY
--------------------------------------------------------------
Harvard University commenced an international class action
arbitration against publicly held Russian oil and gas company
JSC Surgutneftegaz ("Surgut") for intentionally denying holders
of its preferred shares as much as 80% of the cash distributions
to which they are entitled.
Harvard will file a demand with the American Arbitration
Association in New York on behalf of holders of American
Depositary Receipts (ADRs) representing Surgut preferred shares.
The demand specifically alleges that, for at least each of the
last six years, Surgut has intentionally declared dividends far
below the amount mandated by the company charter, as well as the
prospectus used in offering its securities, by using an
artificially low "net profit" figure that bears no relationship
to the company's actual net profits that it recognizes and
reports for tax and accounting purposes.
As a significant holder of ADRs, Harvard alone has been deprived
of millions of dollars of cash dividends to which it is
entitled. Damages to all Surgut preferred shareholders may total
hundreds of millions of dollars.
Surgut management controls a substantial amount of the company's
common shares. Retention by Surgut of virtually all the
company's earnings benefits management at the expense of the
company's preferred shareholders despite clear contractual
obligations to this group of security holders. Surprisingly, as
Harvard's demand illustrates, Surgut management has expressly
admitted its failure to distribute dividends to preferred
shareholders, justifying this illegitimate action with the
argument that payment of dividends to foreign preferred
shareholders would be an inefficient use of capital.
Harvard's demand cites a February 2001 letter from the General
Director of Surgut, V.L. Bogdanov, to Mikhail Kasyanov, then
Prime Minister of the Russian Federation. In the letter, Mr.
Bogdanov argues that the calculation of net profits as required
by the charter "results in a considerable part of cash flow in
the form of dividends leaving abroad to shareholders who are
mostly registered in off-shore zones." This admission by Mr.
Bogdanov supports Harvard's claim that Surgut intentionally
undertook the improper calculation of preferred dividends in
order to avoid payments to holders of the security.
Harvard has requested that Surgut pay the full amount of
dividends owed to it and other class members for prior years. A
panel in New York will arbitrate Harvard's claims. The panel's
ruling will be enforceable in courts in the Russian Federation
through an international treaty, the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards.
Jeff Larson, Senior Vice President and International Equity
Portfolio Manager for Harvard Management Company, said, "We are
disappointed that our previous attempts to correct the obvious
failure of Surgut to meet its obligations were unsuccessful,
making this arbitration necessary. There are many preferred
shareholders, who, like Harvard, simply want to receive the
payments they are entitled to under Surgut's charter and
prospectus."
Larson added, "In general, business relationships work only when
companies fulfill their fundamental obligations to all
shareholders -- including living up to the terms of their
corporate charters, complying with basic accounting standards
and providing appropriate levels of transparency."
Robert Skinner, a partner of Ropes & Gray LLP who represents
Harvard in the arbitration, said, "Surgut's obligation to pay
dividends to the preferred shareholder class members is clearly
spelled out in Surgut's own documents, as is the required amount
of those dividends. All previous attempts to communicate with
Surgut management in order to address its misrepresentations,
omissions and unfulfilled obligations have been met with
inaction. Arbitration thus has become necessary to enforce these
rights."
Harvard's investment in Surgut was made through its Harvard
Management Company affiliate, the principal investment advisor
to the Harvard University Endowment Fund.
For more details, contact Kimberly Kriger or Todd Fogarty of
Kekst and Company by Phone: 212-521-4862 or 212-521-4854 by E-
mail: Kimberly-Kriger@kekst.com or Todd-Fogarty@kekst.com or
visit their Web site: http://www.kekst.com
KB HOME: Homeowners Launch Suit Over Excessive Association Dues
---------------------------------------------------------------
KB Home faces a class action filed in California Superior Court
for Los Angeles County, alleging that the homebuilder
underestimated the cost of maintaining its Haysley Hills
development in Castaic, California and billing homeowners with
excessive fees, Building Online reports.
California couple Neil and Carrie Gereb filed the suit. The
Gerebs and their neighbors were promised homeowners association
dues of $70 per month, Attorney Brian Kabateck told Building
Online.
He added that when KB turned over maintenance of the steep
slopes surrounding the development's 739 homes, the association
discovered it had 2 million more square feet of common ground to
maintain than KB disclosed. The association doubled homeowners'
monthly fees but has been unable to keep up with the costs of
maintaining the 2.4 million square feet common area, he said.
"We're talking about millions of dollars (more) in the years
that lie ahead," he told Building Online. "People relied on
that information to figure out whether they could afford to buy
the houses."
The suit demands that KB pay the difference between the
homeowners fees it advertised and the actual cost of maintaining
the development in perpetuity. The lawsuit, which also names
Richmond American Homes of California Inc., asks for attorney's
fees and damages.
A spokeswoman for the Company said the firm was paying to
maintain the common area "to insure that our homeowners have not
incurred any additional costs" and was "working closely with the
(homeowners association) to resolve this issue," Building Online
reports.
KENTUCKY: Couples Sue Oldham County Over 19% School-Tax Increase
----------------------------------------------------------------
The group that opposed the 19 percent Oldham County school-tax
increase last fall has sued the school board and others, calling
the action unconstitutional, the Courier-Journal reports.
Three couples Walt and Shirley Wilkening, Dewey and Cheryl
Wotring, and Carl and Nadene Sayer sued in Franklin Circuit
Court in Frankfort June 22. They asked that the lawsuit be made
a class action on behalf of everyone who pays property taxes in
Oldham County and are seeking a property-tax refund of about
$4.5million plus interest for taxpayers. Named as Defendants in
the lawsuit are the Oldham County school board, the state Board
of Education and County Clerk Ann Brown, school Superintendent
Blake Haselton and school board chairwoman Linda Theiss.
The plaintiffs argue that the school board and County Clerk Ann
Brown robbed them of their right to recall the tax, which the
board levied in August. Opponents had collected 3,600 signatures
- well above the number needed to force a referendum on the
issue - but most of the names were thrown out in December
because of a technical violation.
But the group's primary claim is against the state, stemming
from a provision that a lawyer for the plaintiffs, Timothy
Eifler, said was buried in the 2003 state budget.
In that budget bill, the General Assembly gave school districts
experiencing rapid enrollment growth the authority to levy two
additional "nickel" taxes (5.1 cents per $100 of assessed value)
to pay for construction. One was subject to voter recall; the
other wasn't. But Eifler said that including a money-raising
issue in a spending bill violates the Kentucky Constitution.
State Department of Education spokeswoman Lisa Gross declined to
comment yesterday, saying that neither the department nor the
state Board of Education comments on pending litigation. But
another official and a representative of the Kentucky School
Boards Association said yesterday that this may be the first
lawsuit in Kentucky over an unsuccessful attempt to get a
school-tax recall on a ballot.
The dispute began in August, when the school board heard a
proposal to increase its tax rate for the 2003-04 school year by
10.7 cents, to 67 cents per $100. Of that, 6.1 cents of the tax
would be subject to a recall, including one of the 5.1-cent
taxes allowed by the General Assembly.
On Aug. 28, immediately after a public hearing that drew about
200 people, the board unanimously approved the tax increase. It
said the district desperately needed the extra money to build
three schools to accommodate its enrollment growth.
The Oldham school system is one of a handful in Kentucky gaining
students so rapidly that it can't afford to build enough schools
to keep up. Enrollment has grown from about 8,400 in fall 1999
to 10,241 this spring, leaving 10 of its 14 schools crowded.
But the plaintiffs claim that the school board improperly
advertised the public hearing. Quoting Kentucky Revised Statute
160.470 a law regulating school-tax rates - they contend that
the ad should not have been placed in The Oldham Era because it
is not the newspaper with the highest circulation in the county.
Finally, the plaintiffs claim that they were denied due process
when Brown threw out 187 pages of names on their petition for a
referendum on the tax increase. Brown said those pages were
disqualified because each contained signatures representing
multiple voting precincts, and state law requires each page to
represent a single precinct. The plaintiffs argue that Brown had
legal discretion to disqualify individual names rather than
entire pages.
For more details, contact Timothy J. Eifler of Ogden Newell &
Welch by Mail: 1700 PNC Plaza, 500 West Jefferson Street,
Louisville, Kentucky 40202-2874 (Jefferson Co.) by Phone:
(502) 560-4208 by Fax: (502) 627-8708 or by E-mail:
teifler@ogdenlaw.com
MASSMUTUAL: NJ Court Approves Sales Practices Lawsuit Settlement
----------------------------------------------------------------
A proposed settlement has been preliminarily approved by the
United States District Court for the District of New Jersey in a
class action lawsuit, captioned Varacallo, et al. v.
Massachusetts Mutual Life Insurance Company, et al., concerning
certain permanent, term life, and disability income policies
issued by Massachusetts Mutual Life Insurance Company, MML Bay
State Life Insurance Company, Connecticut Mutual Life Insurance
Company or C.M. Life Insurance Company. The settlement will be
considered for approval at a fairness hearing, which will be
held on November 22, 2004.
MassMutual has denied and continues to deny all the allegations
in the action and believes that the allegations have no basis in
law or fact. Further, MassMutual believes that it has complied
with all existing laws that relate to its sale, administration
and servicing of policies. MassMutual has settled the litigation
to avoid the uncertainty, expense and burden of protracted
litigation. All of the relief, however, is contingent on the
Court finally approving the settlement agreement and the terms
and conditions in the agreement.
The settlement would provide certain types of relief to certain
class members, depending upon the type of policy owned during
the class period:
(1) general policy relief (available only to class members
with permanent policies), which would provide a
settlement death benefit; or
(2) claim review relief (with certain types of claims
available to class members with certain types of
policies), which would provide relief based on the
nature and strength of a class member's claims.
Additional relief in the form of written disclosures and changes
in policy administration procedures is also being implemented.
MICHIGAN: Residents File Property Suit Over Flawed Sewer System
---------------------------------------------------------------
About 150 households initiated a civil class action in St. Clair
County Circuit Court, Michigan against the engineering firms who
designed and are maintaining the Marysville sewer systems, The
Times Herald reports. About 300 households were flooded the
weekend of May 22 and 23, prompting residents to ask why
flooding still is happening in their basements.
The lawsuit alleges several counts of negligence against Ann
Arbor-based Tetra Tech MPS formerly McNamee, Porter & Seely Inc.
and Ann Arbor engineering firm Ayres, Lewis, Norris & May. The
suit seeks undetermined damages from the company for homeowners
who lost property.
Attorney Phillip Bozzo said engineering firm Ayres, Lewis,
Norris & May didn't do enough homework to determine what size of
system is required in Marysville, the Times Herald.
Ashok Singhal, president of Ayres, Lewis, Norris and May, said
the work was done properly and met state standards. Brian
Rubel, vice president of Tetra Tech, told the Times Herald that
he was surprised to be named in the suit because his company
didn't design the system.
"Our firm has only recently been retained by the city of
Marysville to evaluate the performance on their waste-water
collection system and to assist the city in planning and
implementing a strategy to manage waste-water flows," Rubel
said.
MICROSOFT CORPORATION: Appeals Court Upholds DOJ Antitrust Pact
---------------------------------------------------------------
The United States Court of Appeals for the District of Columbia
upheld the landmark settlement forged by Microsoft Corporation
with the Department of Justice and several state attorneys
general, ZDNet.com reports.
In June 2000, federal judge Thomas Penfield Jackson originally
ordered that the software giant be split in two as a penalty for
violating federal antitrust law. An appeals court a year later
upheld some findings that the software maker had abused its
monopoly position, but threw out the breakup order.
In 2002, the Company inked a settlement agreement with the
Justice Department and nine states to settle the suit. Nine
states dissented to the settlement, saying it was not harsh
enough and it would even allow the Company to use the settlement
to further entrench their hold on the technology market, an
earlier Class Action Reporter story (March 27,2003) states.
In November 2002, Judge Kollar-Kotelly approved the settlement
and rejected the harsher penalties sought by the nine dissenting
states. Under the settlement, the Company agreed to give
computer makers greater freedom to feature rival software on
their machines by allowing them to hide some Microsoft icons on
the Windows desktop. The settlement also required the software
giant to disclose server protocols to rivals, offer uniform
licensing of Windows to computer makers and not engage in
exclusive contracts that would prohibit software developers or
PC makers from using competing products.
The state of Massachusetts appealed the approval of the
settlement, arguing that the district court abused its
discretion in adopting several provisions Microsoft proposed
while rejecting others put forth by Massachusetts and other
litigating states. The appeal also stated that the court should
have taken more direct action to prevent Microsoft from tying
its products together, a practice known as "commingling."
The DC Appellate Court rejected the appeal, saying in an 83-page
ruling that the settlement aided competition without taking such
a drastic step. "Far from abusing its discretion, therefore,
the district court, by remedying the anticompetitive effect of
commingling, went to the heart of the problem Microsoft had
created, and it did so without intruding itself into the design
and engineering of the Windows operating system. We say, 'Well
done!'" the court said in the ruling, according to a ZDNet
story.
Two industry groups--the Computer and Communications Industry
Association (CCIA) and the Software and Information Industry
Association (SIIA)--had separately asked the appeals court to
allow them to bring their own appeal of the settlement. The
appeals court agreed with the groups that they should be able to
argue their case, but found their appeal without merit and
denied it, along with the one brought by Massachusetts.
"CCIA and SIIA make various arguments--some overlapping those
raised by Massachusetts--that the consent decree between the
United States and Microsoft is not in the public interest," the
court said in its ruling. "We find no merit in any of CCIA's
and SIIA's objections, substantive or procedural. We therefore
uphold the district court's approval of the consent decree as
being in the public interest."
Microsoft was quick to praise the decision. "Of all the steps
we've taken over the past two years, this is the most important
step in resolving our legal issues and moving forward," Brad
Smith, senior vice president and general counsel at Microsoft,
said in a statement. "Today's unanimous decision sends a clear
and emphatic message that the settlement reached two years ago
is a fair and appropriate resolution of these issues."
The Justice Department said it was pleased with Wednesday's
ruling, according to ZDNet. "This is a resounding victory for
the Justice Department and American consumers," Assistant
Attorney General R. Hewitt Pate said in a statement. "The
Court's forceful decision confirms what the Department has been
saying all along--our settlement protects the public by
providing a full and effective remedy for Microsoft's
anticompetitive conduct."
RealNetworks was not as pleased with the decision, saying that
the ". U.S. courts and the European Commission have each
concluded that Microsoft's unlawful abuse of its operating
system monopoly has restricted competition, stifled innovation
and limited consumer choice . Unfortunately, the settlement
approved today by the court has done little to restore
competition in the browser and operating system markets."
In an interview, CCIA president Ed Black said he was
disappointed, but not surprised by the ruling, ZDNet reports.
"The trial court traditionally gives great discretion to
Department of Justice and the appeals court traditionally gives
discretion to the trial court," he said. "We had a double
hurdle to overcome. They even tried to block us from joining the
case."
The pro-Microsoft Association for Competitive Technology issued
a statement supporting the ruling. "Today the Court of Appeals
rejected the attempts of competitors to gain special favors from
the American courts at the expense of the industry and
consumers," ACT president Jonathan Zuck said in a statement.
"Rather than begin innovating, however, these competitors have
unfortunately moved their crusade against Microsoft to Europe."
Massachusetts could appeal to the U.S. Supreme Court, although
the high court would have to agree to hear the case. A
representative for the Massachusetts attorney general declined
to comment, saying the agency would issue a statement by e-mail
later Wednesday, ZDNet reports.
NEW YORK: Schenectady County Jail Faces Suit Over Strip-Searches
----------------------------------------------------------------
The Schenectady County Sheriff's Department in New York faces a
class action filed by two women who claimed they were improperly
subjected to strip searches at the jail, the Associated Press
reports.
Both 19-year-old Nichole Marie McDaniel and 18-year-old Lessie
Lee Davies claim they were strip searched June 11 at the jail.
Both were arrested on misdemeanor charges of shoplifting and
endangering the welfare of a child. The suit, filed on behalf
of at least 5,000 people who were subjected to a strip-search
since 2001, seeks monetary damages and an injunction barring the
county and sheriff from strip-searching those charged with petty
crimes.
Attorney Robert Keach told AP the searches violated a 2001
ruling by federal Judge Thomas McAvoy that declared
unconstitutional a Schenectady City Police policy to strip
search all detainees before placing them in a holding cell.
Judge McAvoy's ruling in the earlier civil rights suit said
people charged with misdemeanors or violations cannot be strip
searched without reasonable suspicion that they have weapons or
contraband.
Sheriff Harry Buffardi told The Daily Gazette the jail policy
already is to strip search felons only. He plans to investigate
the women's claims.
SIEBEL SYSTEMS: SEC Files NY Suit Over Regulation FD Violations
---------------------------------------------------------------
The Securities and Exchange Commission filed an action in the
U.S. District Court for the Southern District of New York
charging that Siebel Systems, Inc., violated Regulation FD and a
November 2002 Commission cease-and-desist order. Two senior
Siebel executives, Kenneth A. Goldman, the company's chief
financial officer, and Mark D. Hanson, a current senior officer
and the company's former Investor Relations Director, are
charged with aiding and abetting Siebel's violations.
The Commission also charged Siebel with violating Exchange Act
Rule 13a-15, which requires issuers to maintain disclosure
controls and procedures designed to ensure the proper handling
of information that is required to be disclosed in reports filed
or submitted under the Exchange Act, and to ensure that
management has the information it needs to make timely
disclosure decisions. This is the first Commission case charging
a violation of this rule.
Regulation FD prohibits issuers from selectively disclosing
material nonpublic information to certain persons-securities
analysts, broker-dealers, investment advisers and institutional
investors-before disclosing the same information to the public.
In November 2002, the Commission issued an order finding that
Siebel violated Regulation FD and requiring Siebel to cease and
desist from committing or causing any future violations.
Siebel settled that matter without admitting or denying the
Commission's findings. As part of the settlement, Siebel also
agreed to pay a $250,000 civil penalty.
The Commission's complaint alleges that, six months after the
cease-and-desist order was issued, Goldman disclosed material
nonpublic information during two private events he attended with
Hanson in New York on April 30, 2003, a "one-on-one" meeting
with an institutional investor and an invitation-only dinner
hosted by Morgan Stanley. The Commission charges that, at both
the meeting and the dinner, Goldman made positive comments about
the Company's business activity levels and transaction pipeline
that materially contrasted with negative public statements
Siebel made about its business in the preceding several weeks.
According to the complaint, based on Goldman's comments in the
April 30 meeting, an institutional investor converted its
108,200 shares short position in Siebel stock into a 114,200
share long position-a net change of 222,400 shares. On May 1,
2003, the day following the private meetings, the company's
stock price closed approximately 8% higher than the prior day's
close, and the trading volume was nearly twice the average daily
volume for the preceding year.
The Commission alleges that Hanson, who had been put in charge
of Siebel's Regulation FD compliance, failed to prevent the
selective disclosures, and that both Hanson and Goldman failed
to cause Siebel to make a public disclosure the next day.
Finally, the complaint alleges that Siebel failed to maintain
disclosure controls and procedures designed to ensure the proper
handling of information that is required to be disclosed in
reports filed or submitted under the Exchange Act and to ensure
that management has the information it needs to make timely
disclosure decisions.
The Commission's complaint charges Siebel with violating, and
Goldman and Hanson with aiding and abetting Siebel's violations
of, the Commission's cease-and-desist order, Section 13(a) of
the Securities Exchange Act of 1934 and Regulation FD thereunder
by making an intentional selective disclosure of material
nonpublic information or, alternatively, a non-intentional
selective disclosure. The Commission's complaint also charges
Siebel with violating Section 13(a) and Rule 13a-15 thereunder
for its failure to maintain adequate disclosure controls and
procedures. The Commission is seeking an order commanding Siebel
to comply with the Commission's cease-and-desist order,
permanent injunctions and civil penalties against all
defendants, and other equitable relief to ensure that Siebel
adopts adequate Regulation FD compliance policies and practices
and that it maintains adequate disclosure controls and
procedures.
The suit is styled "SEC v. Siebel Systems, Inc., Kenneth A.
Goldman and Mark D. Hanson, Civil Action No. 04-CV-5130, GBD."
SPSS INC.: Plaintiff Deadline in IL Securities Fraud Lawsuit Set
----------------------------------------------------------------
The deadline for purchasers of SPSS, Inc. (Nasdaq:SPSSE)
publicly traded securities to move for lead plaintiff in a
securities fraud class action recently brought against the
Company must move to serve as lead plaintiff by filing a motion
in the United States District Court for the Northern District of
Illinois by July 13, 2004.
The complaint, filed by a client of Geller Rudman, PLLC, charges
that SPSS, Jack Noonan, and Edward Hamburg, violated Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b- 5 promulgated thereunder, by issuing a series of material
misrepresentations to the market between May 2, 2001 and March
30, 2004, about the Company's revenues, thereby artificially
inflating the price of SPSS common stock. 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 overstated its revenue by between $3
million and $6 million;
(2) that the Company accomplished this through improper
recognition of revenue in violation of Generally
Accepted Accounting Principles ("GAAP") and the
Company's own accounting interpretations on revenue
recognition;
(3) the Company's earnings per share were materially
inflated; and
(4) that as a result of the above, the Company's financial
results were inflated at all relevant times.
On March 30, 2004, SPSS announced that it would delay the filing
of its annual report on Form 10-K with the United States
Securities and Exchange Commission to complete an additional
review initiated by the Company. News of this shocked the
market. Shares of SPSS fell $2.55 per share or 12.17 percent on
March 31, 2004 to close at $18.40 per share.
For more details, contact Samuel H. Rudman, Esq. or David A.
Rosenfeld, Esq. of Geller Rudman, PLLC by Mail: Client Relations
Department - 200 Broadhollow, Suite 406, Melville, NY 11747 by
Phone: 631-367-7100 or 1-877-992-2555 by Fax: 1-631-367-1173 by
E-mail: info@geller-rudman.com or visit their Web site:
http://www.geller-rudman.com/view_case.asp?cID=288
ST. PAUL COMPANIES: Stock Settlement Hearing Set August 12, 2004
----------------------------------------------------------------
The United States District Court for the District of Minnesota
will hold a fairness hearing for the proposed settlement of In
re The St. Paul Companies, Inc. Securities Litigation (Master
File No. 02 Civ. 3825 (PAM/RLE)) on behalf of all persons who
purchased or acquired shares of the common stock of company
during the period from November 5, 2001 through July 9, 2002,
inclusive (the "Class Period").
The Court has scheduled a fairness hearing to approve the
proposed settlement, which shall be held before the Hon. Paul A.
Magnuson, on August 12, 2004, at 10:00 a.m. in Courtroom 1 of
the United States District Court for the District Of Minnesota,
730 Federal Building, 316 North Robert Street, St. Paul,
Minnesota 55101.
For more details, contact David Kessler, Esq. or Michael K.
Yarnoff, Esq. of SCHIFFRIN & BARROWAY, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 or by Phone:
(610) 667-7706 OR Jeffrey M. Haber, Esq. or Timothy J. MacFall,
Esq. of BERNSTEIN LIEBHARD & LIFSHITZ, LLP by Mail: 10 East 40th
Street, 22nd Floor, New York, NY 10016 or by Phone: (212) 779-
1414 OR The St. Paul Companies, Inc. Securities Litigation c/o
The Garden City Group, Inc. - Claims Administrator by Mail: P.O.
Box 9000 #6178, Merrick, NY 11566-9000 by Phone: (866) 808-3536
STARLINK LOGISTICS: Farmers Soon To Receive Share in Settlement
---------------------------------------------------------------
A class action lawsuit against StarLink corn may soon be settled
and the farmers who combined their claims may receive
compensation for losses incurred, The Asia Intelligence Wire
reports.
Several farmers launched a lawsuit against StarLink maker
StarLink Logistics Inc. and Avanta USA, which owns StarLink
distributor Garst Seed Co., claiming they lost money even though
they didn't grow StarLink. StarLink corn was approved for use
as animal feed but not for human consumption. However, in 2000,
some of the genetically engineered corn was mistakenly mixed
with corn intended for food or export, forcing several food
companies to recall products and causing a worldwide drop in
corn prices, an earlier Class Action Reporter story (July
30,2003) reports.
Lawyers say that under the settlement, every farmer who did not
grow StarLink in 2000 is eligible for a share, which could mean
up to $2 per acre. Approximately 150,000 claims were filed.
StarLink Logistics and Advanta USA have agreed a $112.2 M
payment to fund the settlement. The StarLink fiasco affected
all corn growers, not just those using the product as prices for
corn fell.
SUTTER HEALTH: Patients Launch Suit For Unfair Trade Practices
--------------------------------------------------------------
California hospital chain Sutter Health faces a federal class
action, alleging the hospital charged the uninsured more than
the insured patients, the Associated Press reports.
The suit, styled "Darr v. Sutter Health, 04-2624," was filed on
behalf of a California man who was injured in May when he fell
at a grocery store and was taken to Alta Bates Medical Center in
Berkeley. He was charged $4,600 in services and was discharged
that day with minor injuries.
The suit alleges he would have had to pay substantially less had
he been insured. The suit charges the Sacramento-based hospital
chain of not living up to its non-profit, charitable tax-exempt
status. The suit further alleged the hospitals use coercive
tactics to collect the improper sums charged, which has resulted
in negative credit reports for many patients. The suit also
asserted that the hospital, being exempt from taxation, should
supply care for free or at steep discounts to the needy.
The 26-hospital chain "should provide appropriate and reasonable
charity care for people who cannot afford to pay for hospital
services," Kelly Dermody, one of the attorneys who filed the
suit in San Francisco, told AP. She added that the poor and
uninsured are the only patients required to pay the sticker
price of services. Private and government insurance companies
pay substantially less for the same services.
Studies have shown the group donated about 1 percent of its
earnings for free emergency room care. That is about 40 percent
less than the statewide average for private, for-profit
hospitals, Ms. Dermody said.
Sutter Health, however, said those allegations are no longer
true. "We have been working on solutions for the communities
that we serve," spokesman Bill Gleeson told AP.
The hospital chain just started giving free or discounted
services to all poor individuals and families, he said. In
addition, the chain adopted a policy prohibiting wage and bank
garnishments, and property foreclosure for those who cannot pay
their bills.
UNITED RETAIL: Plaintiffs File Amended Overtime Wage Suit in CA
---------------------------------------------------------------
Plaintiffs filed an amended class action against United Retail
Incorporated in the California Superior Court, Los Angeles
County, styled "Erik Stanford vs. United Retail Incorporated."
The suit was filed by a former store on behalf of certain
current and former associates in California in the previous four
years. The plaintiffs in the Stanford case assert state wage
and hour claims.
The Company intends to oppose class certification strongly and
to defend the Stanford case vigorously on the merits, the
Company said in a regulatory filing with the United States
Securities and Exchange Commission.
VIRTUAL CASH: SEC Imposes Injunctive Relief, Fines V. Traders
-------------------------------------------------------------
The U.S. District Court for the Southern District of Florida
entered Final Judgments of Permanent Injunction and Other Relief
(Final Judgments) against Eric L. Turner (Turner), Kenneth M.
May (May), Virtual Cash Card LLC (Virtual Cash) and Anthony
Joseph Pinone (Pinone), respectively. The Final Judgments,
entered with the consent of Turner, May and Virtual Cash,
without admitting or denying the allegations of the SEC's
complaint, enjoin them from violations of Sections 5(a), 5(c)
and 17(a) of the Securities Act of 1933, Sections 15(a)(1) and
10(b) of the Securities Exchange Act of 1934, and Rule 10b-5
thereunder.
The Final Judgment as to Pinone, also entered with his consent
and without admitting or denying the allegations of the
Securities and Exchange Commission's complaint, enjoins him from
violations of Sections 5(a) and 5(c) of the Securities Act of
1933 and Section 15(a)(1) of the Securities Exchange Act of
1934. In addition to injunctive relief, the Final Judgments
order Turner and May to pay disgorgement in the amounts of
$41,360 and $32,031, plus prejudgment interest in the amounts of
$1,077.11 and $834.16, respectively, and find them jointly and
severally liable for disgorgement in the amount of $320,0000,
plus prejudgment interest of $7,537.50. The Final Judgment
entered against Pinone orders him to pay disgorgement in the
amount of $142,500, but partially waives the disgorgement amount
and does not impose a civil penalty based upon the Sworn
Statement of Financial Condition and other supporting
documentation submitted by Pinone.
On February 18, 2004, the SEC filed a notice voluntarily
dismissing, with prejudice, its claims against Defendants
Virtual Cash Card International, Inc., Omni Advertising and
Kenance Consulting, Inc. and its remaining monetary claims for
disgorgement and civil penalties against Defendants Virtual Cash
Card LLC and Omni Advertising, Inc.
The suit is styled "SEC v. Virtual Cash Card LLC d/b/a Virtual
Cash, Eric L. Turner, Kenneth M. May, Omni Advertising, Inc.,
Anthony Joseph Pinone (Defendants) and Virtual Cash Card
International, Inc., Omni Advertising and Marketing, Inc.,
Kenance Consulting, Inc. (Relief Defendants), Case No. 02-61672-
CIV-ROETTGER."
VIVENDI UNIVERSAL: Programmers Launch Overtime Wage Suit in CA
--------------------------------------------------------------
Vivendi Universal Games faces a class action filed in the
California Superior Court in Los Angeles County by one of its
programmers, alleging violations of overtime wage laws, IGN
Insider reports.
VU Games programmer Neil Aitken filed the suit, alleging that
the Company has not properly paid its programmers for time
worked in excess of 40 hours a week. Although salaried employees
are usually exempt from overtime, California law requires that
"computer programmers" be paid overtime, despite exempt status.
The suit further alleges that the Company instructed its
employees to misrepresent hours worked so that excessive hours
were not reported. The suit seeks payment of accumulated
overtime wages, as well as damages.
The Company was unwilling to comment on the lawsuit, citing its
policy not to comment on pending litigation, IGN Insider
reports.
WAL-MART STORES: 4 Women File Declarations of Sex Bias Charges
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Four former employees of Wal-Mart Stores, Inc.'s stores in
Virginia have come forward to serve as witnesses in the landmark
sex discrimination suit filed against the retail giant, the
Times-Dispatch reports.
Donna Reed, Anna Stumpf, Kim McLamb and Joan Berry have all
submitted public explanations of why they want to serve as
witnesses in the suit, and filed a sworn declaration elaborating
numerous cases of discrimination while working for the Company.
Ms. Reed worked in Chesapeake, Ms. Stumpf worked in Virginia
Beach, Ms. McLamb worked in Gloucester and Ms. Berry worked in
Newport News.
The four women are the first among the 115 women to submit sworn
statements about the store's alleged discriminatory practices.
They represent the 1.6 million-member class in what is presently
the largest private class action in U.S. history.
The women charge that Wal-Mart, the largest private employer in
the United States, has consistently avoided promoting women and
paying them wages equal to men's. In their declaration, the
women revealed they were routinely denied promotion
opportunities and made to accept less money than men. They also
stated that men in managerial positions ignored or retaliated
against the women who tried to use the company's "open-door"
policy to bring their concerns to the attention of their
superiors.
"I decided to become a witness in this case after I heard Wal-
Mart's CEO Lee Scott give a speech shortly after this lawsuit
was filed," Ms. Stumpf wrote in March 2003, according to the
Times-Dispatch. "He claimed that the 'open-door' policy could
handle any discrimination problems at Wal-Mart . I honestly did
not understand how Mr. Scott could stand in front of us and make
this statement that he surely knew was untrue."
"Several times throughout my career at Wal-Mart, I complained
that women working in the same job as men made less than the
men," Ms. McLamb wrote in April 2003. Three men, assistant
managers, "told me that the reason why men made more than women
was that the men 'had families to support.' No other response
to my complaints were ever made."
The declarations are available online at www.walmartclass.com.
The Web site was established by the Impact Fund, a civil-rights
advocacy group, to keep the public abreast of case developments.
Women who wish to take part in the lawsuit can do so via that
Web site.
Asbestos Alert
ASBESTOS LITIGATION: AFG Completes Transport Insurance Purchase
---------------------------------------------------------------
In the fourth quarter of 2003, American Financial Group Inc.
(AFG) pursued a sale of Transport Insurance Co., an inactive
property and casualty subsidiary with only run-off liabilities,
including old asbestos and environmental claims. Transport's
asbestos and environmental (A&E) reserves represent around one-
eighth of AFG's total A&E reserves. Although an agreement has
not been finalized, management expects to complete a sale in
2004.
The Company's claims department establishes case reserves and
expense reserves for A&E claims (relating to policies and
participations in reinsurance treaties and former operations) as
specific policies are identified. In addition to the case
reserves established for known claims, management establishes
additional reserves for claims not yet known or reported and for
possible development on known claims. These additional reserves
are management's best estimate based on its review of industry
trends and other industry information about such claims, with
due consideration to individual claim situations like the A.P.
Green case.
In February 2003, Great American Insurance Co. (GAI), an AFG
subsidiary, entered into an agreement for the settlement of
asbestos related coverage litigation under insurance polices
issued during the 1970's and 1980's to Bigelow-Liptak Corp. and
related companies, subsequently known as A.P. Green Industries
Inc. Management believes that this settlement will enhance
financial certainty and provides resolution to litigation that
represents AFG's largest known asbestos-related claim and the
only such claim that management believes to be material.
The settlement is for $123,500,000 (GAI has the option to pay in
cash or over time with 5.25% interest), all of which is covered
by reserves established prior to 2003, and anticipated
reinsurance recoverables for this matter. The agreement allows
up to 10% of the settlement to be paid in AFG Common Stock.
The settlement has received the approval of the bankruptcy court
supervising the reorganization of A.P. Green. It remains
subject to the confirmation by the bankruptcy court of a plan of
reorganization that includes an injunction prohibiting the
assertion against Great American of any present or future
asbestos personal injury claims under policies issued to A.P.
Green and related companies. This process should be completed
in 2004. No payments are required until completion of the
process. If there is no plan confirmation, the outcome of this
litigation will again be subject to the complexities and
uncertainties associated with a Chapter 11 proceeding and
asbestos coverage litigation.
ASBESTOS LITIGATION: Entrx, Metalclad Agree To Release Insurer
--------------------------------------------------------------
Effective June 22, 2004, Metalclad Insulation Corp. (wholly
owned subsidiary of Entrx Corp.) and Entrx Corp. entered into a
Settlement Agreement and Full Policy Release releasing one of
its insurers from its policy obligations for a broad range of
claims arising from injury or damage which may have occurred
during the period March 15, 1980 to March 15, 1981, under an
umbrella liability policy. The Policy provided limits of
$5,000,000 in the aggregate and per occurrence. The insurer
claimed that liability under the Policy had not attached, and
that regardless of that fact, an exclusion in the Policy barred
coverage for virtually all claims of bodily injury from exposure
to asbestos, which is of primary concern to Metalclad Insulation
Corp. Metalclad Insulation Corp. took the position that such
asbestos coverage existed. The parties to the Agreement reached
a compromise, whereby Metalclad Insulation Corp. will receive
$2,500,000 in cash, and Metalclad Insulation Corp. and Entrx
Corp. agreed to indemnify and hold harmless the insurer from all
claims that could be alleged against the insurer respecting the
policy, limited to $2,500,000 in amount.
The Agreement was attached to the Company's filing with the
Securities and Exchange Commission, with the identity of the
insurer omitted as a consequence of the confidentiality
provision of the Agreement. The Agreement including the name of
the insurer was filed separately with the SEC, along with a
request for confidential treatment of the omitted information in
the Agreement.
ASBESTOS LITIGATION: Hanson Received 10,000 New Claims for 2004
---------------------------------------------------------------
Hanson PLC reports that in the first five months of 2004,
asbestos claims representing around 10,200 new claimants were
received and claims representing around 2,800 claimants were
resolved (of which around 70% were dismissed). At the end of
May 2004, outstanding claimants totaled around 132,000 (124,200
at December 2003). This includes over 40,000 claimants in Ohio
who may eventually be classified as "unimpaired" (and thus
removed from court dockets) under legislation recently passed in
that State.
As anticipated, the gross cost of resolving asbestos claims has
been comparatively high in the year to date. This has been
driven largely by plaintiff lawyers in reaction to the
deliberations that have taken place in the U.S. Senate aimed,
currently unsuccessfully, at achieving a Federal asbestos reform
bill. As a result, the gross cost in the first half of 2004 is
forecast to be about $8,000,000 higher than the $23,800,000
recorded in the second half of 2003. The net first half cost
for 2004 (after insurance recoveries and before tax) is forecast
to be about $3,000,000.
Current expectations for the second half of 2004 are that the
gross cost is likely to return to a level more in line with last
year's second half, although it is anticipated that the
proportion of the gross cost met by insurance will start to
reduce. Consequently, Hanson will maintain a gross asbestos
balance sheet provision of about $320,000,000 ($316,800,000 at
December 2003) by taking a pre-tax, non operating exceptional
charge of $35,000,000 (about GBP12,000,000 post tax) at the half
year. The offsetting insurance asset is forecast to be about
$44,000,000 at June 30, 2004 ($73,000,000 at December 31, 2003).
Any requirement for an increase in the level of overall
provision will be assessed at the year end based on underlying
gross cost trends.
ASBESTOS LITIGATION: PPG Notes Value Changes In Stock For Trust
---------------------------------------------------------------
PPG Industries Inc. reported to the Securities Exchange
Commission that it uses an equity forward arrangement to hedge a
portion of its exposure to changes in the fair value of its
stock that is to be contributed to the asbestos settlement
trust. PPG's policies do not permit speculative use of
derivative financial instruments. In November 2002, PPG entered
into a one-year renewable equity forward arrangement with a bank
in order to partially mitigate the impact of changes in the fair
value of PPG stock that is to be contributed to the asbestos
settlement trust. This instrument has been renewed for an
additional year. In accordance with the terms of this
instrument the bank purchased 504,900 shares of PPG stock on the
open market at a cost of $24,000,000 through December 31, 2002
and during the first quarter of 2003 the bank purchased an
additional 400,000 shares at a cost of $19,000,000, for a total
principal amount of $43,000,000. For the three months ended
March 31, 2004 and 2003, PPG recorded expense of $5,000,000 and
$4,000,000, respectively, for the change in fair value of this
instrument, which is reflected in "net asbestos settlement" in
its condensed statement of income. The fair value of this
instrument as of March 31, 2004 and December 31, 2003 was a
current asset of $10,000,000 and $15,000,000, respectively.
Certain of PPG's insurers are contesting coverage with respect
to some claims, and other insurers, as they had prior to the
asbestos settlement, may contest coverage with respect to some
of the asbestos claims if the settlement is not implemented.
PPG's lawsuits and claims against others include claims against
insurers and other third parties with respect to actual and
contingent losses related to asbestos matters.
As of March 31, 2004, PPG was one of many defendants in numerous
asbestos-related lawsuits involving around 116,000 claims. Most
of PPG's potential exposure relates to allegations by plaintiffs
that PPG should be liable for injuries involving asbestos-
containing thermal insulation products manufactured and
distributed by Pittsburgh Corning Corp. (PC). PPG and Corning
Inc. are each 50% shareholders of PC. PPG has denied
responsibility for, and has defended, all claims for any
injuries caused by PC products.
On March 28, 2003, Corning Inc. announced that it had separately
reached its own arrangement with the representatives of asbestos
claimants for the settlement of certain asbestos claims that
might arise from PC products or operations. The terms of the
PPG Settlement Arrangement and the Corning Settlement
Arrangement have been incorporated into a bankruptcy
reorganization plan for PC along with a disclosure statement
describing the plan, which PC filed with the Bankruptcy Court on
April 30, 2003. Amendments to the plan and disclosure statement
were filed on August 18 and November 20, 2003. Creditors and
other parties with an interest in the bankruptcy proceeding were
entitled to file objections to the disclosure statement and the
plan of reorganization, and a few parties filed objections. On
November 26, 2003, after considering objections to the second
amended disclosure statement and plan of reorganization, the
Bankruptcy Court entered an order approving it and directing
that it be sent to creditors, including asbestos claimants, for
voting.
The PPG Settlement Arrangement would not become effective until
30 days after the plan of reorganization was finally approved by
an appropriate court order that was no longer subject to appeal.
If the PC plan of reorganization incorporating the terms of the
PPG Settlement Arrangement were approved by the Bankruptcy Court
and all legal requirements under the Bankruptcy Code or
otherwise were satisfied, the Court would enter a channeling
injunction prohibiting present and future claimants from
asserting bodily injury claims against PPG or its subsidiaries
or PC relating to the manufacture, distribution or sale of
asbestos-containing products by PC or PPG or its subsidiaries.
The injunction would also prohibit co-defendants in those cases
from asserting claims against PPG or its subsidiaries for
contribution, indemnification or other recovery. All such
claims would have to be filed with the Trust and only paid from
the assets of the Trust. The channeling injunction would not
extend to claims against PPG alleging injury caused by asbestos
on premises owned, leased or occupied by PPG (so called
"premises claims"), or claims alleging property damage resulting
from asbestos. Around 9,000 of the 116,000 claims pending
against PPG and its subsidiaries are premises claims. Many of
PPG's premises claims have been resolved without payment from
PPG. To date, PPG has paid about $7,000,000 to settle around
1,100 premises claims, virtually all of which has been covered
by PPG's insurers. There are no property damage claims pending
against PPG or its subsidiaries. PPG believes that it has
adequate insurance for the asbestos claims not covered by the
channeling injunction and that any financial exposure resulting
from such claims will not have a material effect on PPG's
consolidated financial position, liquidity or results of
operations.
PPG has no obligation to pay any amounts under the PPG
Settlement Arrangement until the Effective Date. PPG and
certain of its insurers (along with PC) would then make payments
to the Trust, which would provide the sole source of payment for
all present and future asbestos bodily injury claims against
PPG, its subsidiaries or PC alleged to be caused by the
manufacture, distribution or sale of asbestos products by these
companies. PPG would convey the following assets to the Trust.
First, PPG would convey the stock it owns in PC and Pittsburgh
Corning Europe. Second, PPG would transfer 1,388,889 shares of
PPG's common stock. Third, PPG would make aggregate cash
payments to the Trust of about $998,000,000, payable according
to a fixed payment schedule over 21 years, beginning on June 30,
2003, or, if later, the Effective Date. PPG would have the
right, in its sole discretion, to prepay these cash payments to
the Trust at any time at a discount rate of 5.5% per annum as of
the prepayment date. Under the payment schedule, the amounts
due June 30, 2003 and 2004 are $75,000,000 and $98,000,000,
respectively. In addition to the conveyance of these assets,
PPG would pay $30,000,000 in legal fees and expenses on behalf
of the Trust to recover proceeds from certain historical
insurance assets, including policies issued by certain insurance
carriers that are not participating in the settlement, the
rights to which would be assigned to the Trust by PPG.
PPG's participating historical insurance carriers would make
cash payments to the Trust of about $1,700,000,000 between the
Effective Date and 2023. These payments could also be prepaid
to the Trust at any time at a discount rate of 5.5% per annum as
of the prepayment date. In addition, as referenced above, PPG
would assign to the Trust its rights, insofar as they relate to
the asbestos claims to be resolved by the Trust, to the proceeds
of policies issued by certain insurance carriers that are not
participating in the PPG Settlement Arrangement and from the
estates of insolvent insurers and state insurance guaranty
funds. PPG would grant asbestos releases to all participating
insurers, subject to a coverage-in-place agreement with certain
insurers for the continuing coverage of premises claims. PPG
would grant certain participating insurers full policy releases
on primary policies and full product liability releases on
excess coverage policies. PPG would also grant certain other
participating excess insurers credit against their product
liability coverage limits.
In the second quarter of 2002, an initial charge of $772,000,000
was recorded for the estimated cost of the PPG Settlement
Arrangement, which included the net present value as of December
31, 2002, using a discount rate of 5.5% of the aggregate cash
payments of about $998,000,000 to be made by PPG to the Trust.
That amount also included the carrying value of PPG's stock in
Pittsburgh Corning Europe, the fair value as of June 30, 2002 of
1,388,889 shares of PPG common stock and $30,000,000 in legal
fees of the Trust to be paid by PPG, which together with the
first payment originally scheduled to be made to the Trust on
June 30, 2003, were reflected in the current liability for PPG's
asbestos settlement in the balance sheet as of June 30, 2002.
The net present value at that date of the remaining payments of
$566,000,000 was recorded in the non-current liability for
asbestos settlement.
The amounts due June 30, 2003 and 2004 of $75,000,000 and
$98,000,000 under the fixed payment schedule described above,
are included in the current asbestos settlement liability in the
accompanying condensed balance sheet, which is $300,000,000 and
$308,000,000 as of March 31, 2004 and December 31, 2003,
respectively. The payment due June 30, 2005 of $91,000,000, and
the net present value of the remaining payments is included in
the long-term asbestos settlement in the accompanying condensed
balance sheet, which is $508,000,000 and $500,000,000 as of
March 31, 2004 and December 31, 2003, respectively. It is
expected that accretion expense associated with the asbestos
liability will continue to be about $8,000,000 per quarter
through the end of 2004.
Because the filing of asbestos claims against the Company has
been enjoined since April 2000, a significant number of
additional claims may be filed against the Company if the
Bankruptcy Court stay were to expire. If the PPG Settlement
Arrangement is not implemented, for any reason, and the
Bankruptcy Court stay expires, the Company intends to vigorously
defend the pending and any future asbestos claims against it and
its subsidiaries. The Company believes that it is not
responsible for any injuries caused by PC products, which
represent the preponderance of the pending bodily injury claims
against it. Prior to 2000, PPG had never been found liable for
any such claims, in numerous cases PPG had been dismissed on
motions prior to trial, and aggregate settlements by PPG to date
have been immaterial. In January 2000, in a trial in a state
court in Texas involving six plaintiffs, the jury found PPG not
liable. However, a week later in a separate trial also in a
state court in Texas, another jury found PPG, for the first
time, partly responsible for injuries to five plaintiffs alleged
to be caused by PC products. PPG intends to appeal the adverse
verdict in the event the settlement does not become effective.
Although PPG has successfully defended asbestos claims brought
against it in the past, in view of the number of claims, and the
questionable verdicts and awards that other companies have
experienced in asbestos litigation, the result of any future
litigation of such claims is inherently unpredictable.
Net income for the first quarter of 2004 also included an after-
tax charge of $3,000,000, or 2 cents a share, to reflect the net
change in the current value of the Company's obligation under
the asbestos settlement agreement. Net income for the first
quarter of 2003 included after-tax charges of $6,000,000, or 3
cents a share, for the cumulative effect of an accounting change
related to the accounting for asset retirement obligations, and
$3,000,000, or 2 cents a share, to reflect the net change in the
current value of the Company's obligation under the asbestos
settlement agreement.
ASBESTOS LITIGATION: Rohm & Haas Co. Reserves For Premises Cases
----------------------------------------------------------------
Rohm & Haas Co. reported that it reserved amounts for premises
asbestos cases that it believes are probable and estimable; it
cannot reasonably estimate what its asbestos costs will be if
the current situation deteriorates and there is no tort reform.
There are also pending lawsuits filed against Morton
International (which was acquired by Rohm & Haas) related to
employee exposure to asbestos at a manufacturing facility in
Weeks Island, Louisiana with additional lawsuits expected. The
Company expects that most of these cases will be dismissed
because they are barred under worker's compensation laws;
however, cases involving asbestos-caused malignancies may not be
barred under Louisiana law. Subsequent to the Morton
acquisition, the Company commissioned medical studies to
estimate possible future claims and recorded accruals based on
the results.
Morton has also been sued in connection with asbestos related
matters in the former Friction Division of the former Thiokol
Corp., which merged with Morton in 1982. Settlement amounts
have been minimal and many cases have closed with no payment.
The Company estimates that all costs associated with future
claims, including defense costs, will be well below its
insurance limits.
ASBESTOS LITIGATION: Sealed Air Cites Lower Asbestos Legal Fees
---------------------------------------------------------------
Sealed Air Corp. reported that its other income (net) was
$5,300,000 in the first quarter of 2004 compared with expense of
$500,000 in the first quarter of 2003. The change in the first
quarter of 2004 compared with 2003 was due to a variety of items
including reduced expense compared with the first quarter of
2003 resulting from lower legal and related fees for asbestos-
related matters (net benefit of $600,000). In calculating
diluted earnings per common share, the weighted average number
of common shares in 2004 and 2003 assumes the issuance of
9,000,000 shares of common stock reserved for the asbestos
settlement and, in 2004, includes 41,000 common shares from the
assumed exercise of options.
The Company's accounts receivable securitization program (with a
bank and an issuer of commercial paper administered by the bank)
was amended by the parties on April 2, 2003 to provide that
Sealed Air Funding could sell receivables interests aggregating
up to $60,000,000, originated only by Sealed Air Corp. (U.S.),
to the bank or the issuer of commercial paper until a definitive
asbestos settlement agreement, satisfactory to the bank, had
been entered into. The parties amended the receivables program
as of February 11, 2004 to provide that, upon the occurrence of
specified events that would materially increase the Company's
liability in respect of the Grace bankruptcy or the asbestos
liability arising from the Cryovac transaction, the maximum
amount of receivables the Company could sell under the facility
would be $60,000,000, and Cryovac would again be ineligible to
sell receivables.
ASBESTOS LITIGATION: Union Carbide Corp., Anchem Battling Suits
---------------------------------------------------------------
Union Carbide Corp. (UCC) is involved in a large number of
asbestos-related suits filed primarily in state courts during
the past three decades. These suits principally allege personal
injury resulting from exposure to asbestos-containing products
and frequently seek both actual and punitive damages. The
alleged claims primarily relate to products that UCC sold in the
past, alleged exposure to asbestos-containing products located
on UCC's premises, and UCC's responsibility for asbestos suits
filed against a former subsidiary, Amchem Products Inc. In many
cases, plaintiffs are unable to demonstrate that they have
suffered any compensable loss as a result of such exposure, or
that injuries incurred in fact resulted from exposure to the
Corporation's products.
Influenced by the bankruptcy filings of numerous defendants in
asbestos-related litigation and the prospects of various forms
of state and national legislative reform, the rate at which
plaintiffs filed asbestos-related suits against various
companies, including the Corporation and Amchem, increased in
2001, 2002 and the first half of 2003. The rate of filing
significantly abated in the second half of 2003 and the first
quarter of 2004. The Corporation expects more asbestos-related
suits to be filed against it and Amchem in the future, and will
aggressively defend or reasonably resolve, as appropriate, both
pending and future claims.
During the third and fourth quarters of 2002, the Corporation
worked with Analysis, Research & Planning Corp. (ARPC), a
consulting firm with broad experience in estimating resolution
costs associated with mass tort litigation, including asbestos,
to explore whether it would be possible to estimate the cost of
disposing of pending and future asbestos-related claims that
have been, and could reasonably be expected to be, filed against
the Corporation and Amchem. ARPC concluded that it was not
possible to estimate the full range of the cost. Despite its
inability to estimate the full range of the cost of resolving
future asbestos-related claims, ARPC advised the Corporation
that it would be possible to determine an estimate of a
reasonable forecast of the cost if the following assumptions
were made:
(1) In the near term, the number of future claims to be
filed against UCC and Amchem will be at a level
consistent with levels experienced immediately prior to
2001.
(2) The number of future claims to be filed against UCC and
Amchem will decline at a fairly constant rate each year
from 2003.
(3) The percentage of claims settled by UCC and Amchem out
of the total claims resolved (whether by settlement or
dismissal) will be consistent with the percentage for
2001 and 2002.
(4) The average settlement value for pending and future
claims will be equivalent to those experienced during
2001 and 2002.
Based on the resulting study completed by ARPC in January 2003,
the Corporation increased its December 31, 2002 asbestos-related
liability for pending and future claims for the 15-year period
ending in 2017 to $2,200,000,000, excluding future defense and
processing costs. Around 28 percent of the recorded liability
related to pending claims and around 72 percent related to
future claims.
At each balance sheet date, the Corporation compares current
asbestos claim and resolution activity to the assumptions in the
ARPC study to determine whether the accrual continues to be
appropriate. In addition, in November 2003, the Corporation
requested ARPC to review the asbestos claim and resolution
activity during 2003 and determine the appropriateness of
updating its study. In its response to that request, ARPC
reviewed and analyzed data through November 25, 2003 to
determine the number of asbestos-related filings and costs
associated with 2003 activity. In January 2004, ARPC stated
that an update at that time would not provide a more likely
estimate of future events than that reflected in its study of
the previous year and, therefore, the estimate in that study
remained applicable. Based on the Corporation's own review of
the asbestos claim and resolution activity and ARPC's response,
the Corporation determined that no change to the accrual was
required at that time. Management noted, however, that the
total number of claims filed in 2003 did exceed the number of
claims assumed to be filed in the ARPC study. The total number
of claims filed in the first quarter of 2004 also exceeded the
number of claims assumed to be filed in the ARPC study.
However, based on the Corporation's review of 2004 activity, the
Corporation determined that no change to the accrual was
required at March 31, 2004.
The asbestos-related liability for pending and future claims was
$1,800,000,000 at March 31, 2004 and $1,900,000,000 at December
31, 2003. At March 31, 2004, around 34 percent of the recorded
liability related to pending claims and around 66 percent
related to future claims. At December 31, 2003, around 33
percent of the recorded liability related to pending claims and
around 67 percent related to future claims.
The insurance receivable related to the asbestos liability was
determined after a thorough review of applicable insurance
policies and the 1985 Wellington Agreement, to which the
Corporation and many of its liability insurers are signatory
parties, as well as other insurance settlements, with due
consideration given to applicable deductibles, retentions and
policy limits, and taking into account the solvency and
historical payment experience of various insurance carriers.
The receivable for insurance recoveries related to asbestos
liability was $957,000,000 at March 31, 2004 and $1,000,000,000
at December 31, 2003.
The Corporation's insurance policies generally provide coverage
for asbestos liability costs, including coverage for both
resolution and defense costs. The Corporation increased its
receivable for insurance recoveries related to its asbestos
liability at December 31, 2002, thereby recording the full
favorable income statement impact of its insurance coverage in
2002. Accordingly, defense and resolution costs recovered from
insurers reduce the insurance receivable. Prior to increasing
the insurance receivable related to the asbestos liability at
December 31, 2002, the impact on results of operations for
defense costs was the amount of those costs not covered by
insurance. Since the Corporation expenses defense costs as
incurred, defense costs for asbestos-related litigation (net of
insurance) have impacted, and will continue to impact results of
operations. The pretax impact for defense and resolution costs,
net of insurance, was $25,000,000 in the first quarter of 2004
and $30,000,000 in the first quarter of 2003, and was reflected
in "Cost of sales."
In September 2003, the Corporation filed a comprehensive
insurance coverage case in the Circuit Court for Kanawha County
in Charleston, West Virginia, seeking to confirm its rights to
insurance for various asbestos claims. Although the Corporation
already has settlements in place concerning coverage for
asbestos claims with many of its insurers, including those
covered by the 1985 Wellington Agreement, this lawsuit was filed
against insurers that are not signatories to the Wellington
Agreement and/or do not otherwise have agreements in place with
the Corporation regarding their asbestos-related insurance
coverage. The Corporation continues to believe that its
recorded receivable for insurance recoveries from all insurance
carriers is collectible.
ASBESTOS LITIGATION: UIC Asbestos Reserve Tagged At $31.541M
------------------------------------------------------------
United Industrial Corp. (NYSE: UIC) reported to the Securities
and Exchange Commission that its unaudited insurance receivable
for asbestos litigation as of March 31, 2004 was $20,317,000,
while reserve for asbestos litigation was $31,541,000.
United Industrial makes training and simulation systems,
automatic test equipment, unmanned aerial vehicle systems,
ordnance systems, and mechanical support systems through
subsidiary AAI Corp. (87% of sales); the military accounts for
77% of AAI's sales. UIC also has an energy business, Detroit
Stoker, which makes industrial stokers, gas and oil burners,
alternative energy systems, and municipal solid-waste combustion
systems used to produce steam for heating, industrial processing
and electric power generation. The company has sold its Symtron
Systems subsidiary (firefighter training systems) and
discontinued its transportation business.
ASBESTOS LITIGATION: WTM Discloses 71 Million Krona Of Reserves
---------------------------------------------------------------
White Mountains Insurance Group Ltd. (NYSE: WTM) reports in a
regulatory filing that at December 31, 2003, its claims and
claim adjustment expense reserves net of reinsurance recoveries
included SEK71,500,000 for asbestos and environmental-related
claims. The Company's exposure to asbestos and environmental
claims arise principally from general liability insurance
contracts.
Loss reserves including IBNR have been established when
sufficient information has been developed to indicate the
exposure of a specific insurance policy. The Company estimates
the impact of these exposures by establishing case basis
reserves on all known losses and LAE and by computing IBNR
losses based on previous experience.
Due to uncertainties, additional liabilities may arise for
amounts in excess of the current related reserves. The Company
does not believe these amounts could be material to the
Company's consolidated operating results and financial condition
in future periods.
During the year the Company and its subsidiaries commuted
several significant contracts. Sirius International commuted
several acceptances within the discontinued Film Financing area,
which resulted in a negative underwriting result of about
SEK65,000,000. In addition, in order to further reduce the
exposure on asbestos and pollution claims several old contracts
were commuted with predominately UK cedants. The accumulated
negative impact was about SEK14,000,000.
ASBESTOS ALERT: Aon Corporation Indemnities Amount To $19M
----------------------------------------------------------
As of March 31, 2004, the liabilities associated with Aon
Corporation's asbestos indemnities were included in "other
liabilities" in its condensed consolidated statements of
financial position. Such liabilities amounted to $19,000,000,
net of reinsurance recoverables and other assets of $85,00,000.
The insurance liabilities represent estimates of known and
future claims expected to be settled over the next 20 to 30
years, principally with regards to asbestos and other health
exposures. Based on current estimates, management believes that
the established liabilities of discontinued operations are
sufficient.
COMPANY PROFILE
Aon Corporation (NYSE: AOC)
200 E. Randolph St.
Chicago, IL 60601
Phone: 312-381-1000
Fax: 312-381-6032
http://www.aon.com
Employees : 54,000
Revenue : $ 9,810,000,000.00
Net Income : $ 628,000,000.00
Assets : $27,027,000,000.00
Liabilities : $22,479,000,000.00
(As of December 31, 2003)
Description: Aon Corp. is the world's #2 insurance brokerage and
consulting company (behind Marsh & McLennan). The firm operates
in three major segments: commercial brokerage, consulting
services, and consumer insurance underwriting. The company's
brokerage operations include retail and wholesale insurance for
groups and businesses, as well as reinsurance. Its consulting
business specializes in employee benefits. Aon's older but
smaller insurance underwriting segment (including founder W.
Clement Stone's original insurance underwriting business,
Combined Insurance) offers supplementary health, accident, and
life insurance and extended warranties for consumer goods.
ASBESTOS ALERT: KBR To Settle Claims Through Reorganization Plan
----------------------------------------------------------------
Halliburton Co. reports in a filing with the Securities and
Exchange Commission that its subsidiary, Kellogg Brown & Root,
Inc. (KBR), which sponsors the Kellogg Brown & Root, Inc.
Retirement and Savings Plan (a defined contribution plan for
certain qualified employees of Halliburton Co. and certain
subsidiaries), is a defendant in a large number of asbestos and
silica related lawsuits and intends to settle these claims
through a Prepackaged Plan of Reorganization under Chapter 11 of
the U.S. Bankruptcy Code filed in December 2003.
KBR believes that the Plan of Reorganization will not have an
impact on the Plan or the Plan's sponsor's ability to continue
as a going concern. KBR has the ability and intent to fund any
contributions due under the Plan and any costs of administration
of the Plan.
COMPANY PROFILE
Kellogg Brown & Root Inc.
601 Jefferson St.
Houston, TX 77002
Phone: 713-753-2000
Fax: 713-753-5353
http://www.halliburton.com
Employees : 64,000
Sales : $ 9,276,000,000.00
(As of December 31, 2003)
Description: From building ships for the Navy in WWII to
fighting oil well fires in Iraq, Kellogg Brown & Root has a long
history of providing engineering and construction services for
defense and other governmental contracts. Now the engineering
and construction arm of oil field services giant Halliburton,
KBR offers construction management, project management, and
facilities operations and maintenance services. The group
provides services to a broad range of markets, including the oil
and gas, infrastructure, pulp and paper, power, and process
industries. As part of a $4,200,000,000 settlement of asbestos
claims, Halliburton filed a prepackaged bankruptcy for some
units of KBR, which plan to exit Chapter 11 soon.
New Securities Fraud Cases
ALLIANCE GAMING: Wolf Haldenstein Lodges Securities Suit in NV
--------------------------------------------------------------
The law firm of Wolf Haldenstein Adler Freeman & Herz LLP
initiated a class action lawsuit in the United States District
Court for the District of Nevada, on behalf of all persons who
purchased the securities of Alliance Gaming Corporation
("Alliance Gaming" or the "Company") (NYSE: AGI) between January
15, 2004 and June 7, 2004, inclusive, (the "Class Period")
against defendants Alliance Gaming and certain officers and
directors of the Company.
The case name is Houldin v. Alliance Gaming Corporation, et al.
The complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's
securities.
The complaint alleges that during the Class Period, defendants
caused Alliance Gaming's shares to trade at artificially
inflated levels through the issuance of false and misleading
statements. The defendants' wrongful course of business
(1) artificially inflated the prices of Alliance Gaming's
securities during the Class Period by making grossly
inflated projections while knowing these projections
were unachievable;
(2) deceived the investing public, including plaintiff and
other Class members, into acquiring Alliance Gaming's
securities at artificially inflated prices;
(3) allowed the Company to consummate stock-for-stock
acquisitions with inflated stock valued at $16 million;
and
(4) allowed certain defendants to sell $3.6 million worth
of their own shares at artificially inflated prices. As
a result, the Company's shares traded as high as $34
during the Class Period.
For more details, contact Fred Taylor Isquith, Esq., Gregory M.
Nespole, Esq., George Peters, or Derek Behnke of Wolf
Haldenstein Adler Freeman & Herz LLP by Mail: at 270 Madison
Avenue, New York, New York 10016 by Phone: (800) 575-0735 by E-
mail: classmember@whafh.com or visit their Web site:
http://www.whafh.com/cases/alliancegaming.htm
BISYS GROUP: Wolf Haldenstein Lodges Securities Suit in S.D. NY
---------------------------------------------------------------
The law firm of Wolf Haldenstein Adler Freeman & Herz LLP
initiated a class action lawsuit in the United States District
Court for the Southern District of New York, on behalf of all
persons who purchased the securities of BISYS Group, Inc.
("BISYS" or the "Company") (NYSE: BSG) between October 23, 2000
and May 17, 2004, inclusive, (the "Class Period") against
defendants BISYS and certain officers and directors of the
Company.
The case name is Gauthier v. BISYS Group, Inc., et al.
The complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's
securities.
The Complaint alleges that statements made by the defendants
during the class period were materially false and misleading
because they failed to disclose and misrepresented the following
adverse facts:
(1) that BISYS' financial statements were materially false
and misleading;
(2) that the Company was improperly valuing its receivables
in violation of Generally Accepted Accounting
Principles; and
(3) that, as a result of the foregoing, defendants lacked a
reasonable basis for their positive statements about
the Company and their earnings projections.
For more details, contact Fred Taylor Isquith, Esq., Gregory M.
Nespole, Esq., George Peters, or Derek Behnke of Wolf
Haldenstein Adler Freeman & Herz LLP by Mail: at 270 Madison
Avenue, New York, New York 10016 by Phone: (800) 575-0735 by E-
mail: classmember@whafh.com or visit their Web site:
http://www.whafh.com/cases/bisys.htm
CANADIAN SUPERIOR: Siskind Cromarty Lodges Securities Fraud Suit
----------------------------------------------------------------
The law firm Siskind, Cromarty, Ivey & Dowler LLP initiated a
class action lawsuit in the Ontario Superior Court of Justice
against Canadian Superior Energy, Inc. (trading symbol "SNG").
The Statement of Claim also names as defendants Gregory S.
Noval, Michael E. Coolen, Robert Pilling and Leigh Bilton. The
individual defendants are current and former directors and/or
officers of Canadian Superior. The Statement of Claim has been
filed on behalf of Mr. Anh Nguyen, a current shareholder of
Canadian Superior.
The Statement of Claim alleges that, commencing in 2003 and
through to March 11, 2004, the defendants disseminated to the
public materially misleading statements regarding Canadian
Superior's Mariner I-85 gas well in the offshore Nova Scotia
basin, and that the effect of such materially misleading
statements was to increase artificially the price of Canadian
Superior securities. On March 11, 2004, Canadian Superior is
alleged to have shocked the market by disclosing that the
Mariner I-85 well was being abandoned. This announcement is
alleged to have precipitated an immediate 44% decline in
Canadian Superior shares.
For more details, contact Siskind, Cromarty, Ivey & Dowler LLP
by Mail: London, Ontario (Middlesex Co.), Canada by Phone:
(800) 461-6166 (Ext. 376)
HANGER ORTHOPEDIC: Schiffrin & Barroway Lodges NY Stock Suit
------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP has initiated a class
action lawsuit in the United States District Court for the
Eastern District of New York on behalf of all purchasers of the
common stock of Hanger Orthopedic Group (NYSE: HGR) ("Hanger" or
the "Company") from July 29, 2003 through June 18, 2004,
inclusive (the "Class Period").
The complaint charges that Hanger, Ivan R. Sabel, Thomas Kirk,
and George E. McHenry violated the Securities Exchange Act of
1934. 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 improperly booked sales at its Long
Island, New York branches, by allowing employees to
forge prescriptions and record sales for patients who
did not exist;
(2) that the Company, through its illegal billing
practices, defrauded Medicare, Medicaid and Insurance
Companies; and
(3) as a result of this illegal scheme, Hanger, throughout
the Class Period, materially overstated and
artificially inflated Hanger's financial results
through improper recognition of revenue in violation of
Generally Accepted Accounting Principles ("GAAP").
In the evening of June 14, 2004, a New York City television
station news broadcast alleged billing improprieties at the
Company's West Hempstead, New York facility. On June 15, 2004,
Hanger announced that it had been made aware of alleged billing
irregularities. An employee in the West Hempstead office
reported the alleged irregularities on the Company's Compliance
Hot Line. The market reacted swiftly to the news. On June 15,
2004, shares of Hanger fell $1.66 per share or 11.52 percent to
close at $12.75 per share on unusually high trading volume. The
Company's stock continued its decline throughout the week. By
June 17, 2004, shares of Hanger closed at $12.00 per share. On
June 18, 2004, Hanger, in a press release, stated that on June
17, 2004 the Company received a subpoena from the U.S.
Attorney's Office for the Eastern District of New York
requesting that the Company produce documents relating to these
allegations, and seeking information concerning 14 of the
Company's patient care centers located in downstate New York.
The SEC also has requested information from the Company relating
to the allegations. This news shocked the market. Shares of
Hanger fell $2.47 per share or 20.91 percent on June 18, 2004,
to close at $9.34 per share.
For more details, contact Marc A. Topaz, Esq. or Stuart L.
Berman, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
1-888-299-7706 or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com
LEHMAN ABS: Abbey Gardy Lodges Securities Fraud Suit in S.D. NY
---------------------------------------------------------------
The law offices of Abbey Gardy, LLP initiated a class action in
the United States District Court for the Southern District of
New York on behalf of all purchasers of Corporate Backed Trust
Certificates, Verizon New York Debenture-Backed Series 2004-1
(NYSE: CCG) ("Certificates") between January 5, 2004 and May 11
2004, inclusive (the "Class Period").
The suit named as defendants Lehman ABS Corp., U.S. Bank Trust
National Association, Corporate Backed Trust Certificates
Verizon New York Debenture-Backed Series 2004-1 Trust, Lehman
Brothers Inc., RBC Dain Rauscher And Banc Of America Securities
LLC, alleging violations of Sections 11 and 15 of the Securities
Act of 1933.
For more details, contact Nancy Kaboolian, Esq. of Abbey Gardy,
LLP by Phone: (212) 889-3700 or (800) 889-3701 or by E-mail:
Nkaboolian@AbbeyGardy.com
LEXAR MEDIA: Lerach Coughlin Lodges Securities Lawsuit in N.D CA
----------------------------------------------------------------
The law firm of Lerach Coughlin Stoia & Robbins LLP commenced a
class action on June 1, 2004 in the United States District Court
for the Northern District of California on behalf of purchasers
of Lexar Media, Inc. ("Lexar") (NASDAQ:LEXR) publicly traded
securities during the period between July 17, 2003 and April 15,
2004 (the "Class Period").
The complaint charges Lexar and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Lexar designs, develops, manufactures and markets high-
performance digital media that the Company markets as digital
film, as well as other flash-based storage products for consumer
markets that utilize flash memory for the capture and retrieval
of digital content for the digital photography, consumer
electronics, industrial and communications markets.
According to the complaint, the true facts, which were known by
each of the defendants but concealed from the investing public
during the Class Period, were as follows:
(1) that the Company was experiencing widespread and
massive gross margin declines, and in fact, between
December 31, 2003 and March 31, 2004, the Company's
gross margin declined from 23.9% to 17.6%;
(2) that at the retail end, retailers had been stuffed with
inventory which would result in future decreasing sales
making defendants' projections unachievable; and
(3) that the cost of "price protection" associated with
Lexar's Asia and European sales together with a
material decline in the Company's average selling
prices would drastically erode the Company's margins
and EPS.
As a result of the defendants' false statements, Lexar's stock
traded at inflated levels during the Class Period, increasing to
as high as $23.99 per share on November 6, 2003, whereby the
Company's top officers and directors sold more than $16 million
worth of their own shares.
Then, on June 29, 2004, the Company issued a press release
announcing that the preliminary results for the second quarter
would be lower than previously stated. According to the press
release, "The company now expects second quarter net revenues
will be in a range of approximately $155 to $160 million,
compared with $81.5 million in net revenues for the same period
last year and $164.7 million for the first quarter of 2004. The
company further expects to report a net loss in the range of $17
to $19 million, as compared to net income of $7.0 million in the
same period last year and $9.4 million in the first quarter of
2004. The company attributes its lower than expected results for
the second quarter to a number of factors. Greater than
anticipated price reductions and price protection obligations
during the quarter negatively impacted product revenues and
gross margins. Additionally, the combination of the timing of
cost reductions, component purchases and product sales during
the quarter resulted in the company not being able to fully
recognize the benefits of lower costs achieved during the
quarter." The Company's shares have plummeted in response.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin Stoia & Robbins LLP by Phone: 800-449-4900 by E-
mail: wsl@lcsr.com or visit their Web site:
http://www.lcsr.com/cases/lexar/
POZEN, INC.: Schiffrin & Barroway Files Amended Stock Suit in NC
----------------------------------------------------------------
Schiffrin & Barroway LLP initiated an amended securities class
action lawsuit in the United States District Court for the
Middle District of North Carolina on behalf of all securities
purchasers of POZEN, Inc. (Nasdaq: POZN) from October 10, 2000
through May 28, 2004.
The complaint charges POZEN, John R. Plachetka, Matthew E.
Czajkowski, and John R. Barnhardt with violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder. POZEN is a pharmaceutical
development company focused on developing a portfolio of drugs
for the global migraine market. The Company's lead product
candidates included MT 100, a proprietary formulation containing
metoclopramide hydrochloride and naproxen sodium; MT 300, a
proprietary formulation of dihydroergotamine mesylate in a pre-
filled syringe, and MT 400, which is being developed as a co-
active acute migraine therapy.
This action centers around the Company's false and misleading
statements concerning its migraine drugs MT 100 and MT 300. More
specifically, the Company failed to disclose the following
adverse facts:
(1) that defendants knew or recklessly disregarded the fact
that its drugs MT 100 and MT 300 were unsafe and
ineffective;
(2) that despite knowing these facts, the Company entered
into various licensing agreements in order to book
revenues and achieve positive cash flows;
(3) that as a result of booking revenues and achieving
positive cash flows, the defendants were able to
manipulate the Company's stock price in order to attain
large bonuses, which were tied to the Company's stock
price, not the success of the Company's product
pipeline;
(4) with respect to the drug MT 300, defendants knew or
recklessly disregarded the fact that the drug resulted
in higher incidences of nausea and vomiting as compared
to placebo in two Phase III trials and that the drug
failed to show statistical superiority as compared with
placebo with regard to controlling symptoms of
migraines;
(5) with respect to the drug MT 100, defendant knew or
recklessly disregarded the fact that MT 100's chances
of being approved by the FDA were less than 50% because
of concerns about several primary end points,
particularly pain response to migraines at two hours,
lack of data showing consistent two-hour pain response
and symptom relief, and worries about the drug's
carcinogenicity; and
(6) that MT 100 failed to show superiority to a placebo as
measured by a two-hour response and two-hour symptom
migraine relief.
The blow to the Company occurred on October 20, 2003, when POZEN
announced that it had received a not-approvable letter from the
U.S. Food and Drug Administration ("FDA") related to its New
Drug Application ("NDA") for MT 300. The letter was issued based
on the FDA's conclusion that while MT 300 achieved its primary
endpoint, it failed to achieve statistical significance versus
placebo for the relief at two hours of the secondary symptoms of
migraines (nausea, sensitivity to light, and sensitivity to
sound).
On news of this, shares of POZEN fell $5.83 per share, or 32.8
percent, to close at $11.94 per share on unusually high trading
volume on October 20, 2003.
The final blow to the Company's manipulative scheme occurred on
June 1, 2004. Then, POZEN announced that the FDA issued a not-
approvable letter on Friday, May 28, 2004 concerning the
Company's NDA for MT 100 for the acute treatment of migraines.
In the FDA letter, the FDA cited the apparent lack of
superiority of MT 100 over naproxen for sustained pain relief,
which was the primary endpoint for the two component studies.
Additionally, for the first time the FDA raised an approvability
issue concerning the risk of tardive dyskinesia ("TD") presented
by the use of metoclopramide, one of the components of MT 100.
In this regard, the FDA stated in their letter, "Given the
number of patients exposed to MT 100 for at least one year in
your database (about 300), the absence of any detected cases is
consistent with a true rate of TD of about 1%, an unacceptably
high risk in the absence of any demonstrated advantage of the
product." Further, the FDA mentioned that based on animal
studies, there may be a potential risk of carcinogenicity,
presumably due to metoclopramide.
News of this shocked the market. Shares of POZEN fell $3.69 per
share, or 37.2 percent, to close at $6.23 per share on unusually
high volume.
For more details, contact Marc A. Topaz, Esq. or Stuart L.
Berman, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
1-888-299-7706 or 1-610-667-7706 or by E-mail:
info@sbclasslaw.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Se¤orin, Aurora Fatima Antonio and Lyndsey
Resnick, Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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