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The backdating of options continues to cause problems for
investors. Two of the latest examples are Semtech
(NASDAQ: SMTC) and F5 Networks Inc. (NASDAQ: FFIV).
California-based Semtech Corporation engages in the design,
manufacturing, and marketing of analog and mixed-signal
semiconductors for computer, communications, and industrial
markets. On July 20, 2006, the Company said it will
significantly restate its financial results for the previous five
years to account for changes related to the timing of stock
options. On this news, Semtech shares dropped to $12.37
per share. Prior to May 16, 2006, when Semtech was
identified as being one of the companies having potentially
backdated stock options, its stock traded at $18.60 per share.
It appears that investors who purchased Semtech between
January 1, 2003 and July 19, 2006, are affected.
Semtech wasn’t the only company that announced it would
have to restate its earnings on July 20, 2006. On that same
day, F5 Networks, a Seattle-based computer-networking
company, announced that it would restate its earnings for
the past five years and delay its quarterly filing due to issues
with past stock options grants. Previously, on May 22, 2006,
the Company said that it had received a grand-jury
subpoena from the U.S. District Court for the Eastern District
of New York requesting documents related to the granting
of stock options from 1995 through the present, as well as
an SEC notice of an informal inquiry into similar matters.
It appears that investors who purchased F5 Networks since
September 2004, are affected.
Other companies who are embroiled in stock options woes
include: Affiliated Computer Services Inc. (NYSE: ACS),
Altera Corp (NASDAQ: ALTR), CNET Networks
(NASDAQ: CNET), M-Systems Flash Disk Pioneers Ltd
(NASDAQ: FLSH), Power Integrations Inc. (NASDAQ: POWI),
Quest Software Inc. (NASDAQ: QSFT), and SafeNet Inc.
(NASDAQ: SFNT).
Shareholder Litigation Brought Against Zale
Irving, Texas-based Zale Corporation (NYSE: ZLC), through
its wholly owned subsidiaries, operates as a specialty retailer
of fine jewelry in North America. Last week shareholders
brought a class action case against the Company alleging
that the Company issued a series of material misrepresentations
to the market which had the impact of artificially inflating
the market price of its stock. The litigation also alleges that
the Company improperly accounted for extended service
agreements, leases and accrued payroll.
Specifically, the complaint notes that on April 10, 2006,
before the open of regular trading, the truth began to emerge
as Zale announced that the SEC had initiated a broad
investigation into many aspects of the Company's accounting,
operations and disclosure practices, including Zale's
accounting for extended service agreements, leases and
accrued payroll, executive compensation and severance,
earnings guidance, stock trading and the timing of vendor
payments. In reaction to this announcement, the price of Zale
stock dropped over 11% in heavy trading.
Soon Zale investors would receive more bad news. On
Friday, May 5, 2006, after the market closed, the Company
announced that it had replaced its Chief Financial Officer after
discovering that the Company improperly inflated its reported
net cash flows and free cash flows. Investors who purchased
Zale between February 18, 2005 and May 5, 2006, are affected.
In addition to Zale and the companies with backdated options
troubles mentioned above, a few other previously reported
situations involving corporate “irregularities” are briefly
highlighted below.
Herley Industries (NASDAQ: HRLY). 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.
Terayon Communication Systems, Inc. (NASDAQ: TERN)
Shareholder litigation has been brought against the Company
as a result of its disclosure 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.
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.
If you are an affected investor in any of these companies or
any of the companies involved in the backdated options
scandal, you may wish to contact Mark McNair at
info@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
share of any settlement.
Symbol Technology, Inc. (SBL)
Class Period: March 2, 2000 to October 17, 2002
Claims Deadline: October 31, 2006
Claims Administrator: A.B. Data
Tellium, Inc. (TELM)
Class Period: May 17, 2001 to July 1, 2002
Claims Deadline: October 18, 2006
Claims Administrator: Analytics
Information regarding other recent settled cases, including the
cases listed below can be found at www.securitiessleuth.com.
Imperial Chemical Industries PLC (ICI)
Vistacare, Inc. (VSTA)
ARM Financial Group (ARMGQ)
Carreker Corp. (CANI)
Loewen Group Inc. (LWN)
Razorfish, Inc. (RAZF)
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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