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New York-based Estee Lauder Companies Inc. (NYSE: EL)
engages in the manufacture, marketing, and sale of skin
care, makeup, fragrance, and hair care products worldwide.
It also licenses fragrances and cosmetics sold under various
brands. But recently something smells funny at Estee Lauder.
It has been alleged that Estee Lauder insiders used both
channel stuffing and materially false and misleading statements
to prop up reported revenues and earnings long enough to
sell millions of their Estee Lauder shares at artificially inflated
prices.
The Company’s true condition began to emerge on
September 19, 2005, when it disclosed that it would not meet
its guidance for the first half of fiscal 2006 resulting in a 9%
stock drop to $36.05 per share. Subsequently, Estee Lauder
stock would drop to $30.71 after the Company announced on
October 26, 2005, that its earnings for the first quarter of
fiscal 2006 were down 38% from the previous year's earnings
of $95.7 million, or $0.41 per share, on essentially flat sales.
These results were well below analysts’ revised consensus
earnings. However, before this disclosure, Estee Lauder insiders
since April 28, 2005 sold millions of shares of their Estee
Lauder common stock for proceeds in excess of $88 million.
Investors who purchased Estee Lauder between April 28, 2005
and October 25, 2005, are affected.
Nature’s Sunshine Likely to be Delisted
Investors in Utah-based Nature’s Sunshine Products, Inc.
(NASDAQ:NATRE) have recently been stung by a number of
negative disclosures by the Company.
Specifically, on March 20, 2006, Nature’s Sunshine disclosed
the following: 1) an Audit Committee investigation with
respect to certain of its foreign operations indicated that the
Company had certain internal control weaknesses and
identified potential violations of law; 2) the Company may
restate it financial results for the first three quarters of 2005
(ended September 30, 2005) and the years 2002
through 2004 (ended December 31); and 3) the Company
would likely be delisted from Nasdaq.
The Company did not reveal details of the violations of law
or the basis for the restatement. However, in a prior press
release, the Company indicated that the Audit Committee
was reviewing “certain transactions of the Company’s
foreign subsidiaries”. On March 20, 2006, shares of
Nature’s Sunshine declined $2.16 per share or
approximately 13%, from $16.49 per share to
$14.33 per share.
Investors who purchased Nature’s Sunshine between
February 25, 2004 and March 24, 2006, are affected.
Ferry Troubles
Bermuda-based Sea Containers, Ltd. (NYSE: SCR-A) provides
passenger and freight transport and marine container leasing.
On March 24, 2006, the Company revealed that it was
restating its financial statements to reflect a massive,
$500 million write-down of the value of its ferry and
container assets, and that it was in default of its loan
covenants. The Company also announced that it had
decided to quit the ferry business.
It has been alleged, among other things, that Sea Containers
and its top executives knew that its ferry and container
assets were materially impaired, but failed to make the
necessary adjustments, thus keeping the Company in
compliance with its loan covenants, but artificially inflating
the stock.
The market reaction to this news was harsh as the Company’s
stock dropped nearly 40%.
Investors who purchased Sea Containers, Ltd. Stock between
March 15, 2004 and March 24, 2006, are affected.
RELL Accounting Problems
Illinois-based Richardson Electronics (NASDAQ: RELL) provides
engineered solutions, as well as distributes electronic products
to the radio frequency (RF) and wireless communications,
industrial power conversion, security, and display systems
markets worldwide. It appears that investors in RELL have
some real problems, particularly with the Company’s
accounting.
On April 4, 2006, after the close of trading, RELL disclosed:
1) that it would restate its financial statements for the years
ended May 31, 2003, May 29, 2004 and May 28, 2005, and
the interim periods ended September 3, 2005 and
December 3, 2005; and 2) the Company’s President,
Chief Operating Officer and Board Member resigned.
The restatement appears to be related to errors in financial
accounting at one of the Company’s Italian subsidiaries.
The Company is evaluating the adequacy of its accounting
for income taxes in certain foreign jurisdictions for prior
periods.
It appears that investors who purchased RELL between
October 1, 2002 and April 4, 2006, are affected.
If you are an affected investor in Estee Lauder, Nature’s Sunshine,
Sea Containers, Ltd, RELL or any of the other Cases Under
Investigation listed below, you may wish to contact us at
info@securitiessleuth.com or 877.511.4717 to discuss
your options.
CSK Auto Corporation (CAO) The Company stunned its investors
when, on March 27, 2006, the Company announced that it
would not file its fourth quarter and fiscal 2005 financial results
on time and disclosed that it will restate its financial statements
for 2002 through 2005. Investors who purchased
between June 23, 2003 and March 24, 2006, are affected.
Northfield Laboratories, Inc. (NFLD). It has been alleged that
PolyHeme, the Company's sole product, posed serious risks
to users of the product. On February 22, 2006, a story in
The Wall Street Journal revealed that ten of 81 patients who
received the fake blood suffered a heart attack within seven
days, and two of those died. Understandably, its stock plummeted
after this news Investors who purchased the stock between
February 20, 2004 and February 21, 2006, are affected.
PainCare Holdings, Inc. (PRZ) The Company’s stock has
plummeted in light of recent disclosures. Specifically, on
March 15, 2006, the Company announced that it would not
be filing an annual report on Form 10-K for the fiscal year
2005 and that its financial filings for the years 2000 through
2004 and the first three quarters of 2005 were not in
compliance with GAAP and would have to be restated.
Investors who purchased between August 27, 2002 and
March 15, 2006 are affected.
Merge Tech Inc. (MRGE) On Friday, March 17, Merge
Technologies Inc., which does business under the name
Merge Healthcare, announced it plans to restate sales and
earnings figures and will delay filing its Form 10-K annual
report for 2005. Its stock plummeted 12% on this news.
Investors who purchased between August 2, 2005 and
March 17, 2006, are affected.
America Service Group Inc. (ASGRE) On March 15, 2006,
the Company disclosed that it will it will restate previously
filed financial statements for the years ended
December 31, 2001 through December 31, 2004 and for the
first six months of 2005 and the U.S. Attorney for the Middle
District of Tennessee is conducting an inquiry. Not
surprisingly, its stock plummeted 29% the following day.
Investors who purchased its stock between April 25, 2001
and March 15, 2006, probably are affected.
PHH Corporation (PHH) Shares of PHH fell after the Company
announced that it would be delaying filing of its Form 10-K
with the SEC because of accounting adjustments related to
its spin-off from Cendant Corp. Investors who purchased PHH
between May 12, 2005 and March 1, 2006, are affected.
Global Power Equipment (GEG) On March 9, 2006, the Company
announced that its gross profits were overstated for two
China projects and that a restatement is required. Since
May 9, 2005, its stock is down 57%. It appears that investors
who purchased between Global Power Equipment between
April 26, 2004 and March 5, 2006, are affected.
Bausch & Lomb (BOL) At the end of December 2005, 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 BOL between January 27, 2005 and
December 22, 2005, are affected.
Allion Healthcare, Inc. (ALLI) On March 9, 2006, the Company
disclosed that it expects to restate its financial results for the
quarter ended June 30, 2005 and the nine months ended
September 30. The following day its stock plummeted. It
appears that investors who purchased Allion Healthcare
between June 22, 2005 and March 9, 2006, are affected.
Terayon (TERNE) On March1, 2006, the Company disclosed
that it was restating its financial statements for the year ended
December 31, 2004 and the first two quarters of the year
ended December 31, 2005. Investors who purchased TERNE
between April 29, 2004 and March 1, 2006, are affected.
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.
GMH Communities Trust (NYSE: GCT) On March 13, 2006, the
Company’s shares tumbled 25% after it disclosed, among
other things, that it is revising downward its earnings guidance
for 2005 and withdrawing its previously issued earnings guidance
for the year ending December 31, 2006 and that the delay
relates to an Audit Committee investigation following its receipt
of a letter from the Company's CFO alleging, among other
things, a 'tone at the top' problem within Company management.
Investors who purchased stock between May 5, 2005 and
March 10, 2006, are affected.
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.
Bristol-Myers Squibb (BMY)
Class Period: October 19, 1999 to March 20, 2002
Claims Deadline: June 30, 2006
Claims Administrator: Garden City
Eaton Vance Corp. (EV)
Class Period: May 25, 1998 to March 15, 1999 and March 13, 2000 to March 2, 2001
Claim Deadline: May 5, 31, 2006
Claims Administrator: Complete Claims
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
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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