|
A recurring theme of this weekly column is corporate
insiders 'knowing when to sell.' Specifically, 'knowing
when to sell.' is the all too frequent practice of corporate
executives unloading their shares before bad news about
their company is disclosed.
Recently, a New York Times article detailed one of the latest
examples of such insider selling. The company identified in
the article was Checkfree (NASDAQ: CKFR). Checkfree
operates electronic bill-paying Web sites, in some cases, as a
contractor for banks whose names are on the sites.
The New York Times reporter very clearly chronicled three
events. First, he noted thatin April 2006 Checkfree knew it
had a problem. The Company was aware at that time that a
significant number of its customers skipped making payments.
Most certainly, this is something that its investors would like
to have known, but the Company disclosed nothing.
Second, the reporter noted that, in June, 2006, Checkfree's
chief executive sold some stock. Not all of his stock...
just $16 million worth of stock. Apparently, he did sell
enough to allow him to buy a winery.
Finally, the reporter noted that in August, 2006, Checkfree's
stock plunged after the Company belatedly disclosed the
problem. The Company finally told the market the bad news
it had been aware of for months.
What did the chief executive know and when did he know it?
The reporter indicated that a company spokesperson declined
to say whether the CEO had known of the April problem when
he sold in June, or whether he had considered disclosing the
problem before he made his sales. Not surprisingly, the CEO
wasn't available for comment.
One presumes that eventually the CEO will tell his side of the
story. However, most likely it won't be to a reporter. Instead,
it will be to a jury in a courthouse where he will be facing upset
shareholders.
Perhaps to sooth investors, he should send everyone some
complimentary bottles from his new winery It appears that
investors who purchased Checkfree between April 25, 2006
and August 1, 2006, are affected.
Investors in this case, and the cases listed below, should contact
us at info@securitiessleuth.com to discuss your options.
Let's start with your friendly clothier Joseph A. Bank (N
ASDAQ: JOSB). On June 8, 2006, before the opening of
trading, the Company disclosed its sales and earnings for the
first quarter of the fiscal year ending February 3, 2007.
The Company revealed, among other things, that:
(1) its year over year net income declined approximately
12%; and (2) its gross profit declined primarily as a result
of customers favoring 'fall merchandise' over its 'year
round core merchandise'. The Company also issued financial
guidance for fiscal 2006 that was up to 20% below analyst
estimates.
This announcement stunned the market and JOSB dropped
30% in one day. The Company's CEO had previously sold
$35 million worth of stock. It appears that investors who
purchased JOSB between January 5, 2006 and
June 7, 2006, are affected.
Speaking of neighborhood retailers, consider Zale Corporation
(NYSE: ZLC). On April 10, 2006, the Company announced the
SEC had initiated a non-public investigation relating to various
accounting issues and other matters. Shareholder litigation
has been brought against the Company and investors who
purchased between February 18, 2005 and May 5, 2006, are affected.
Two other companies where investors have been hammered
are: The Shaw Group Inc. (NYSE: SGR) and Herley Industries
(NASDAQ: HRLY). The Shaw Group announced before the opening
of trading on July 10, 2006, that its management concluded that
two errors occurred in the preparation of its second quarter
financial statements (ended February 28, 2006) which require
a 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.
Herley Industries disclosed earlier this summer 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.
Finally, the backdated stock option scandal continues to grow
and in a number of instances, investors in affected companies
have been negatively affected. You may want to check your
portfolio for the following companies: Affiliated Computer
Services Inc. (NYSE: ACS), Altera Corp (NASDAQ: ALTR),
CNET Networks (NASDAQ: CNET), F5 Networks Inc.
(NASDAQ: FFIV), M-Systems Flash Disk Pioneers Ltd
(NASDAQ: FLSH), Power Integrations Inc. (NASDAQ: POWI),
Quest Software Inc. (NASDAQ: QSFT), Rambus Inc.
(NASDAQ: RMBS), SafeNet Inc. (NASDAQ: SFNT) and
Semtech (NASDAQ: SMTC).
If you are an affected investor in any of the companies with
accounting 'issues' or any of the companies involved in the
backdated options scandal that are listed below, you may
wish to contact us 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 tp 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
|
