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The stock market can be very punishing when a company
announces unexpected bad news. Unfortunately, those most
negatively affected generally aren’t the corporate insiders
who previously painted the rosy picture, but investors who
recently acquired the stock. A recent example is Bermuda-based
Scottish Re Group (SCT). Scottish Re is a holding company
that engages in the reinsurance of life insurance, annuities
and annuity-type products in the United States.
In February 2006, the Scottish Re Group reported robust
earnings for the fourth quarter of 2005. The Company also
indicated that this positive momentum would continue going
forward. In early May, 2006, Scottish Re reported reduced
earnings for the first quarter of 2006, but the Company dismissed
this development as temporary matter, and not a cause for concern.
But perhaps it wasn’t a temporary problem. On July 28, 2006,
Scottish Re shocked the market by announcing that CEO Scott
Willkomm had resigned, and that, for the second quarter, the
Company would report a huge loss of $130 million, and that results
for the remainder of the year would be negatively affected. On this
news the Company's share prices declined an astounding 75%,
from $16.00 to $3.99, wiping out millions in shareholder value.
Although the stock has recovered some, Scottish Re investors still
have suffered a staggering loss and investors who purchased
between February 17, 2005 and July 28, 2006 are affected
Backdated Options Woes for Aspen Technology
Companies with backdated options problems continue to surface.
Perhaps the most recent company whose shareholders have
been negatively affected in Massachusetts-based Aspen
Technology, Inc. (AZPN). The Company provides software and
professional services that enable process companies to model,
manage, and control their operations.
On September 6, 2006, after the close of trading, Aspen disclosed,
among other things, that a subcommittee of independent directors
concluded that errors were made in the accounting for certain
historical stock options granted during and prior to fiscal 2004,
and previously issued financial statements will require restatement
as a result of these errors. The Company also disclosed that certain
of the Company's previously issued financial statements and the
related reports of its independent registered public accounting firm
should not be relied upon.
Not surprising, Aspen shares dropped the following day. It appears
that investors who purchased Aspen between February 8, 2006
and September 6, 2006 are affected.
ADVO Investors Stung When Merger Collapses
When a merger is announced, it is often viewed as a buying
opportunity for investors. But what happens when the merger
collapses because one of the parties had misrepresented itself in
order to effectuate the merger? Typically, investors who purchased
that company’s stock get badly burned.
A recent is example is Connecticut-based ADVO Inc. (NYSE:AD).
ADVO is a direct mail media company that engages in soliciting
and processing printed advertising from retailers, manufacturers,
and service companies in the United States and Canada.
In this case, it has been alleged that ADVO concealed negative
adverse information about its long-term health and value in order
to accomplish a merger with Valassis Communications, a leading
company in marketing services. Specifically, it has been alleged
that ADVO officers and employees concealed material information,
including that its business had deteriorated so badly that it would
never be replaced and its business was not as nearly successful
as the market and Valassis had been led to believe.
As a result of these ADVO’s representations, investors believed
the acquisition would occur and its stock traded as high as $36.80
per share in August 2006. But Valassis did its due diligence and
on August 30, 2006, Valassis announced that it had filed an action
to rescind its merger agreement with ADVO. On this news, the
ADVO’s shares fell to $28.59 per share. Investors who purchased
ADVO between July 6, 2006 and August 30, 2006 are affected.
If you are an affected investor in Scottish Re Group Limited, Aspen
Technology, ADVO, Inc. or any of the companies listed below
(additional info re these cases are available on our website), you
may wish to contact us at info@securitiessleuth.com or
877.511.4717 to discuss your options.
Affiliated Computer Services Inc. (NYSE:ACS)
CNET Networks (CNET)
F5 Networks Inc. (FFIV)
IMAX (IMAX)
Joseph A. Bank Clothiers (JOSB)
McAfee Inc. (MFE)
Power Integrations Inc. (NASDAQ: POWI)
SafeNet, Inc. (NASDAQ: SFNT)
Sea Containers, Ltd. (NYSE: SCR-A)
Semtech (SMTC)
Stage Stores, Inc. (SSI)
The Shaw Group (SGR)
Tier Technologies Inc. (TIERE)
Witness Systems, Inc. (WITS)
Zale Corporation (ZLC)
Second, you should review your portfolio for class action cases that
have recently settled. 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.
Advanced Marketing Services, Inc. (MKT)
Class Period: January 16, 1999 to January 13, 2004
Claims Deadline: December 19, 2006
Claims Administrator: Garden City
Federal Home Loan Mortgage Corp. (FRE)
Class Period: July 15, 1999 to January 20, 2003
Claims Deadline: December 7, 2006
Claims Administrator: Garden City
Information regarding other recent settled cases, including the
cases listed below can be found at www.securitiessleuth.com.
Symbol Technology, Inc. (SBL)
Tellium Inc. (TELM)
Imperial Chemical Industries PLC (ICI)
Vistacare, Inc. (VSTA)
ARM Financial Group (ARMGQ)
Carreker Corp. (CANI)
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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