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Now that we are in the dog days of summer, we have a
chance to look back at the year. Most certainly, it has
been a trying year for investors. It hasn't been the best
of times, nor, thankfully, has it been the worst of times.
Instead, it has become increasingly apparent that, just as
there isn't peace in the Middle East, Sarbanes-Oxley
hasn't been a cure-all for corporate fraud. Corporate
irregularities continue to surface each and every week
and, as a result, unsuspecting shareholders are
hammered with unexpected losses. Losses, not due
to business risk, but losses due to the greed and
self-serving interest of corporate management.
Meanwhile, the fundamental question remains. Where
are the directors of many of these companies? What
are they doing to protect the company and its
shareholders? Are they too busy playing golf to
carefully review the company's financials or the
structure of options granted to the company's CEO?
The backdating of options continues to dominate the
news, but there are many other very significant problems
at many companies. Below is a brief description of
corporate irregularities at a dozen companies that have
nothing to do with the backdated options scandal.
Sunterra Corporation (Nasdaq: SNRR)
On July 6, 2006, the Company announced that it had
received a letter from The Nasdaq Stock Market on
July 5, 2006, informing the Company that the Nasdaq
Listing Qualifications Panel has determined to deny the
Company's request for continued inclusion on The
Nasdaq National Market and, therefore, to delist the
Company's common stock effective with the open of
business on Friday, July 7, 2006. Investors who
purchased its stock between April 15, 2003 and
June 22, 2006, are affected.
The Shaw Group (NYSE: SGR)
On July 10, 2006, before the opening of trading, the
Louisiana-based Company announced its financial
results for the three months ended May 31, 2006
and disclosed that during the preparation of the
financial statements for the third quarter 2006
(ended May 31, 2006), management concluded that
two errors occurred in the preparation of Shaw's
second-quarter financial statements (ended
February 28, 2006) which require restatement of
the second quarter results. As a result, its stock
dropped 14% on heavier than usual volume.
It appears that investors who purchased Shaw
between April 4, 2006 and July 7, 2006, are affected.
NPS Pharmaceuticals, Inc. (NASDAQ: NPSP)
It has been alleged that the Company violated the
federal securities laws by issuing a series of materially
false statements concerning the potential success of
PREOS, the Company's full-length human parathyroid
hormone, a drug candidate for treatment of
osteoporosis. Specifically, Defendants concealed:
(1) results of the PaTH study evidenced that PEROS
was not different from Fosamax in both bone density
and fracture results; (2) there was a very small market
for this type of drug; (3) a major study concluded that
more studies would be needed to determine efficacy;
and, (4) PREOS could not be prescribed for broader
fracture uses. Investors who purchased NPSP between
August 10, 2005 and May 2, 2006, are affected.
Terayon Communication Systems, Inc. (NASDAQ: TERN)
On March 1, 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 October 28, 2004 and March 1, 2006,
are affected.
Herley Industries (NASDAQ: HRLY)
On June 6, 2006, the Company disclosed that the U.S.
Attorney's office in the E.D. of Pennsylvania indicted the
Company and its chairman on charges of fraud.
Investors who purchased between October 1, 2001 and
June 14, 2006, are affected.
Xerium Technologies, Inc. (NYSE: XRM)
It has been alleged that the Prospectus and Registration
Statement issued in connection with the Company's IPO
contained untrue statements of material facts and omitted
to state other facts necessary to make the statements
made not misleading. Specifically, among other things,
the Prospectus purported to warn about the potential
negative impact of its 'Cost Reduction Programs' but
failed to disclose that the Company's business was then
being negatively impacted by the Cost Reduction
Programs and the loss of business associated therewith.
Investors who purchased Xerium pursuant and/or
traceable to the Company's IPO on or about May 16, 2005
through November 15, 2005, are affected,
CSK Auto Corporation (NYSE: CAO)
On March 26, 2006, the Company indicated that it needed
to conduct a thorough review of certain accounting errors
and irregularities discovered in the course of its ongoing
assessment of internal control over financial reporting and
an internal audit. Investors who purchased CAO between
September 2, 2004 and March 24, 2006, are affected.
Cognos (NASDAQ: COGN)
On Monday, May 15, after the close of trading, the Company,
which is Canada's biggest software Company, disclosed that
it would not file its Annual Report on Form 10-K for the
fiscal year ended February 28, 2006 on time because of an
ongoing review by the Staff of the Division of Corporate
Finance of SEC that may impact the manner in which the
company allocates revenue. On May 16, 2006, Cognos
shares declined $4.46 per share, or approximately 13%,
on heavier than usual volume. Investors who purchased
Cognos stock between June 23, 2005 and May 15, 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.
Tier Technologies Inc. (TIERE)
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.
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.
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.
If you are an affected investor in any of these companies,
you may wish to contact us at info@securitiessleuth.com
or 877.511.4717 to discuss your options.
Besides these cases, as mentioned earlier, investors have
been clobbered by losses in numerous companies when it
has been disclosed that they backdated options that were
given to their corporate executives. These companies
include: Affiliated Computer Services Inc. (NYSE: ACS),
Altera Corp (NASDAQ: ALTR), CNET Networks
(NASDAQ: CNET), KLA-Tencor Corporation (NASDAQ: KLAC),
M-Systems Flash Disk Pioneers Ltd (NASDAQ: FLSH),
McAfee Inc. (NYSE: MFE), Quest Software (NASDAQ: QSFT),
Power Integrations Inc. (NASDAQ: POWI),Rambus Inc.
(NASDAQ: RMBS), and Sycamore Networks (SCMR).
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
share of any settlement.
Imperial Chemical Industries PLC (ICI)
Class Period: August 1, 2002 to March 24, 2003
Claims Deadline: October 18, 2006
Claims Administrator: Rust Consulting
Information regarding other recent settled cases, including
the cases listed below can be found at www.securitiessleuth.com.
Whitehall Jewellers (JWL)
ARM Financial Group, Inc. (ARMGQ)
Network Engines, Inc. (NENG)
Boston Chicken, Inc. (BOST)
Surebeam Corp. (SURE)
Salton, Inc. (SFP)
Bristol-Myers Squibb (BMY)
Royal Ahold N.V. (AHO)
Information regarding these settled cases can be found at www.securitiessleuth.com.
Again 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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