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This week is the start of Ken Lay's testimony. He, like his
cohort, Jeffrey Skilling, is unrepentant.
This, of course, is the trial that was supposed to have changed
everything. The feeling was, if the Enron duo were sent to jail
for a long time, it would send a clear message to potential
corporate wrongdoers. Whether or not this actually happens
is yet to be determined.
One clear thing is that neither the trial nor Sarbanes-Oxley has
put a stop to corporate shenanigans. All you have to do is to
read the papers and you will be stunned by the ongoing rash of
corporate restatements. Thankfully, these irregularities, for the
most part, aren't occurring at corporate giants like Enron and
WorldCom. But corporate irregularities, in particular corporate
restatements, appear to be surfacing almost every day.
The effect of a restatement to an investor is rather simple.
It means that you didn't know the true financial condition of
the company when you bought the stock. You purchased the
stock at an 'artificially inflated' price because, inevitably, when
the company's true financial condition is revealed its stock will
plummet.
Consider a few recent examples:
Vitesse Semiconductor Corp (NASDAQ: VTSS) engages in the
design, development, manufacturing, and marketing of
integrated circuits (ICs) for systems manufacturers in the
communications and storage industries. Last week, the Company
announced, among other things, that it would delay filing its
10-Q securities filing and had put top executives on leave due
to the 'integrity' of stock option documents. It appears that this
announcement affects Vitesse Semiconductor investors who
purchased between May 1, 2001 and April 18, 2006
Another example is Tier Technologies Inc. (NASDAQ: TIERE).
Tier Technologies, Inc. provides transaction processing services,
and software and systems integration services primarily to
federal, state, and local government, as well as to other public
sector clients in the United States.
On April 19, 2006, the Company provided an update based on
the findings of Ropes & Gray LLP, who it had hired in
December 2005, to conduct an independent investigation of
restatement-related issues. The news wasn't good for Tier investors.
Specifically, Ropes & Gray notified the Company that the law
firm had conducted an interview with a former Tier executive
who identified a number of serious new allegations relevant to
the restatement-related issues. As a result, the Company
disclosed that it cannot predict whether the delay in the Audit
Committee's independent investigation will have an adverse
impact on its continued listing and there can be no assurance
that the Panel will conclude that this delay is acceptable. A very
troubling development for TIERE investors and it appears that
those who purchased the stock between January 24, 2002 and
April 19, 2006, are affected.
If you are an affected Vitesse Semiconductor Corp or
Tier Technologies Inc. investor or an affected investor in any
of the companies listed below you may wish to contact us at info@securitiessleuth.com or 877.511.4717 to discuss your options.
Four other recent cases that may be of particular interest to
many of our readers are:
Newpark Resources (NYSE: NR) On April 17, 2006, the Company
disclosed that it is investigating irregularities in accounting for
invoices and that it had suspended its CFO and two executives
at Newpark subsidiaries. Investors who purchased between
January 1, 2005 and April 14, 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.
Zale Corporation (NYSE: ZLC) On April 10, 2006, the Company
announced the SEC had initiated a non-public investigation relating
to various accounting and other matters related to the Company,
including accounting for extended service agreements, leases and
accrued payroll. Subpoenas issued in connection with the
investigation request materials relating to these accounting matters
as well as to executive compensation and severance and earnings
guidance. Zale's stock dropped significantly on this news.
Investors who purchased between November 18, 2003 and
April 7, 2006, are affected.
Richardson Electronics (NASDAQ: RELL) 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. Investors who purchased the stock between
October 1, 2002 and April 6, 2006, are affected.
At this time there are an astonishing number of cases involving
corporate irregularities. Other cases of corporate irregularities
under investigation include:
Sea Containers, Ltd. (NYSE: SCR-A)
Fairfax Financial Holdings, Ldt. (FFH)
CSK Auto Corporation (CAO)
Nature's Sunshine Product, Inc. (NATRE)
America Service Group Inc. (ASGRE)
Global Power Equipment (GEG)
Bausch & Lomb (BOL)
Allion Healthcare, Inc. (ALLI)
Terayon (TERNE)
PainCare Holdings, Inc. (PRZ)
Merge Tech Inc. (MRGE)
GMH Communities Trust (GCT)
For details regarding any of these cases, go to
www.securitiessleuth.com.
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.
Two cases that have recently settled that may be of
particular interest are:
Salton, Inc. (SFP)
Class Period: November 11, 2002 to May 11, 2004
Claims Deadline: July 17, 2006
Claims Administrator: Gilardi
Bristol-Myers Squibb (BMY)
Class Period: October 19, 1999 to March 20, 2002
Claims Deadline: June 30, 2006
Claims Administrator: Garden City
Information regarding other recent settled cases, including the
cases listed below can be found at www.securitiessleuth.com:
Royal Ahold N.V. (AHO)
Textron, Inc. (TXT)
Eaton Vance Corp. (EV)
eFunds Corporation (EFD)
Uniroyal Technology Corp.(UTCIQ)
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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