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When a corporate irregularity comes to light, it's bad news
for the company's shareholders. But when a second unrelated
problem surfaces at the same company, the impact can
be devastating for investors.
Investors at H&R Block (NYSE: HRB) and Bausch & Lomb
(NYSE: BOL) are both feeling the double whammy.
Each Company's initial problem was a restatement which,
unfortunately for investors, are becoming increasingly common.
Bausch & Lomb announced on December 22, 2005, that it
planned to restate its financial results back to 2000 following an
investigation into improper conduct by management of its
Brazilian subsidiary.
H&R Block announced on February 23, 2006 that it would
have to restate its financials because the company - which
promotes itself as a leading tax preparation expert - had
incorrectly filed its taxes.
Unfortunately for investors at both companies, additional
problems would follow. On April 10, 2006, Bausch & Lomb
stopped selling its ReNu MoistureLoc brand of contact lens
solution after the FDA warned of an increased number of
cases of Fusarium Kerstitis, a fungal infection that damages
the cornea and can lead to blindness.
The second problem for H&R Block investors occurred when
NY Attorney General, Eliot Spitzer, announced legal action
against the Company because of its sales of Express IRAs.
These accounts were marketed to lower income wage earners
and were abusive because, in almost all instances, the amount
of annual fees greatly surpassed any income that could be earned.
As you would suspect, stock in both Bausch & Lomb and H&R Block
plummeted as a result of these announcements.
Specifically, investors who purchased Bausch & Lomb between
October 26, 2005 and April 10, 2006, are affected and investors
who purchased H&R Block between June 12, 2002 and
March 14, 2006, are affected.
Investors who purchased either company during these periods
purchased the stock at artificially inflated levels and may wish
to contact us at info@securitiessleuth or (877) 511-4717 to
discuss their options.
In addition, five recent cases of particular interest to many of
our readers are:
Sea Containers, Ltd. (NYSE: SCR-A) 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 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.
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.
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.
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.
Estee Lauder Companies Inc. (NYSE: EL) 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 are artificially inflated prices. Investors
who purchased Estee Lauder between April 28, 2005 and
October 25, 2005, are affected.
At this time there are an unusually large number of corporate
irregularities. Other cases of corporate irregularities under
investigation include:
Fairfax Financial Holdings, Ltd. (FFH)
Zale Corporation (ZLC)
Tier Technologies, Inc. (TIERE)
CSK Auto Corporation (CAO)
Nature's Sunshine Product, Inc. (NATRE)
Global Power Equipment (GEG)
PHH Corporation (PHH)
Global Power Equipment (GEG)
Allion Healthcare, Inc. (ALLI)
Terayon (TERNE)
Northfield Laboratories, Inc. (NFLD)
PainCare Holdings, Inc. (PRZ)
Merge Tech Inc. (MRGE)
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:
Surebeam Corp. (SURE)
Class Period: March 16, 2001 to August 27, 2003
Claims Deadline: July 25, 2006
Claims Administrator: Gilardi
Boston Chicken, Inc. (BOST)
Class Period: February 6, 1995 to October 4, 1998
Claims Deadline: August 17, 2006
Claims Administrator: Hefler Radetich
Information regarding other recent settled cases, including the
cases listed below can be found at www.securitiessleuth.com.
Salton, Inc. (SFP)
Bristol-Myers Squibb (BMY)
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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