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Valentines Day can be an awkward time of the year.
Some people are happily strolling down the streets
after receiving their chocolates or roses, while others
feel left out. Of course, sometimes it is better to receive
nothing, rather than news you don’t want to hear.
Among those who wish that they heard nothing are
investors in ProQuest Company (NYSE: PQE). ProQuest
publishes solutions for the education, automotive,
and power equipment markets.
On February 9, 2006, ProQuest didn’t give its shareholders
chocolate or roses, but bad news. Actually, it wasn’t
really bad news, but the Company was forced to reveal
its true financial condition.
Prior to the market opening on February 9, the Company
announced that it had discovered material irregularities
in its accounting and would have to restate certain of its
previously issued financial statements. No one likes to
hear this news and the market reacted sharply.
ProQuest's stock plummeted to as low as $21.90 per
share, before closing at $24.19 per share on incredibly
high volume. This is quite a shock for ProQuest investors
because, last year, ProQuest had traded for as much as
$37.89 per share. A restatement is not a gift investors
want. As a result, investors in ProQuest would have less
money for roses, orchids, chocolates and other Valentines
Day trifles.
Specifically, ProQuest disclosed that, as a result of the
irregularities, its deferred income and accrued royalty
accounts were materially understated in previously issued
financial statements and its prepaid royalty account was
materially overstated.
Not surprisingly, shareholder litigation has been brought
against the Company, and corporate executives at
ProQuest probably spent part of Valentines Day reading
those complaints. Among other things, its has been
alleged that the Company lacked requisite internal controls,
and, as a result, the Company's projections and reported
results were based upon defective assumptions and/or
manipulated facts. It is also alleged the Company's
financial statements were materially misstated due to its
failure to properly defer income and royalty payments
and its improper capitalization of royalty expenses,
thereby overstating its revenue and income from at
least 1999 to 2005.
Investors who purchased ProQuest between
January 9, 2003 and February 8, 2006 are affected.
If you are an affected investor in ProQuest or any of the
other cases under investigation listed below, you may
wish to contact us at info@securitiessleuth.com.
Cases Under Investigation
Chicago Bridge & Iron Company (CBI) On February 3, 2006,
CBI fired its Chairman, President and Chief Executive
Officer and disclosed that its expects to issue revised
guidance regarding its results of operations for the year
ended December 31, 2005 and that all previous earnings
guidance issued by the Company for 2005 is no longer
operative. Investors who purchased CB&I between
March 9, 2005 and February 3, 2006 are affected.
Applica Inc. (APN) On April 20, 2005, the Company revealed
that its business was suffering and that it was marking
down inventory and experiencing increased warranty
expenses. Investors who purchased Applica between
November 4, 2004 and April 28, 2005 are affected.
Amkor (AMKR) The Company’s stock plunged 25% after
its was disclosed that its gross margins had declined
materially and that its “product mix” had turned
unfavorable. Investors who purchased Amkor between
October 27, 2003 and July 1, 2004, are affected.
Take Two Interactive Software (TTWO) Since
January 18, 2006, Take Two investors have been stung
by a series of negative announcements. On
January 25, 2006, the Company’s audit committee
chairwoman resigned and stated that management failed
to keep the board informed of key issues. Among other
things, the Company is currently being investigated by
the FTC for possibly engaging in unfair or deceptive
practice in the sale of its Grand Theft Auto video game.
Investors who purchased between October 25, 2004
and January 27, 2006 are affected.
Dot Hill Systems Corp. (HILL) On February 3, 2005,
the Company announced its preliminary Fourth Quarter
financial results and that it would be restating its 2004
unaudited financial results due to a data entry error
that the Company attributed to “the material weaknesses
in its internal control over its financial closing process.”
Investors who purchased HILL between April 23, 2003
and February 3, 2005 are affected.
Omnicare, Inc. (OCR) On January 30, 2006, Omnicare
shares declined $6.09 per share, or 11.06 %, from
$55.05 to $48.97 per share on heavier than usual
volume. On January 27, 2005, the Cincinnati Enquirer
reported that Michigan Attorney General Mike Cox's
office investigated Omnicare offices outside of Detroit.
Investors who purchased Omnicare between
August 3, 2005 and January 27, 2006, are affected.
Nautilus, Inc.(NLS). On January 18, 2006, before the
opening of the market, the Company disclosed that it
expected fourth quarter 2005 net sales in the range of
$179-183 million and earnings per share in the
$0.07-0.12 range. Previously, on November 2, 2005,
the Company provided fourth quarter 2005 guidance
of net sales of $210 million and earnings per share in
the $0.44-0.48 range. The market reacted strongly to
the news and the stock plunged almost 25%.
Investors who purchased Nautilus between April 27, 2005
and January 16, 2006 are affected.
Bausch & Lomb (BOL) At the end of December the
Company indicated that it would restate its financial
results dating back to 2000 following an investigation
into improper conduct by management of its Brazilian
subsidiary. Investors who purchased in 2005 are affected.
If you are an affected investor in any of these situations
or the Cases Under Investigation, you may wish to
contact Mark McNair at securitiessleuth.com or
877.511.4717 to discuss your options.
Now with respect to settled cases. If you are an affected
investor – you purchased any of these stocks during the
relevant class period, you may wish to contact the claims
administrator to obtain additional information. Remember,
if you don’t submit your claim form, you won’t receive your
proportionate share of recovery.
Eagle Building Technologies (EGBT)
Class Period: November 21, 2000 to February 14, 2002
Claims Deadline: May 1, 2006
Claims Administrator: Berdon
eFunds Corporation (EFD)
Class Period: July 21, 20000 to October 24, 2002
Claims Deadline: May 5, 2006
Claims Administrator: Gilardi
Uniroyal Technology Corp.(UTCIQ)
Class Period: February 8, 2000 to May 13, 2002
Claims Deadline: June 28, 2006
Claims Administrator: Garden City
Solectron Corp. (SLR)
Class Period: June 18, 2001 to September 26, 2002
Claims Deadline: March 28, 2006
Claims Administrator: Garden City
NUI Corp. (NUI)
Class Period: November 8, 2001 to October 17, 2002
Claims Deadline: March 7, 2006
Claims Administrator: Garden City
Asia Pulp & Paper Company, Ltd. (APUUY)
Class Period: August 28, 1999 to April 4, 2001
Claims Deadline: March 6, 2006
Claims Administrator: Analytics
Cornell Companies, Inc. (CRN)
Class Period: March 6, 2001 to March 5, 2002
Claims Deadline: March 3, 2006
Claims Administrator: Gilardi
Again, if you are affected by a settled case, then you should
contact the claims administrator (rather than us). However,
if you are an affected investor in any of the companies under
investigation, you many wish to contact us so that you
can consider your options.
Likewise, if you happen to be aware of corporate restatements
or other financial fraud -- especially if you're a victim --
you're encouraged to contribute to the Sleuth by giving your
own tip-offs at www.securitiessleuth.com or by e-mailing
info@securitiessleuth.com. You can also call Mark McNair
at 877-511-4717. If you have a friend or colleague you
think would benefit from The Sleuth, please pass along
this issue and ask them to sign up at
www.cartville.com/app/join.asp?MerchantID=47994.
Warmest regards,
Mark McNair
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