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Should
the size of shareholder losses affect the sentence
a
defendant receives? How do you measure those losses?
How
should a person's position and authority in a company
affect
his or her sentence?
Today,
the Wall Street Journal reported an important decision
that
addressed some of these issues. Specifically, the
5th
Circuit threw out a 24-year sentence that James Olis
received.
Mr. Olis wasn't a top Dynegy executive, but, rather,
a
mid-level accountant. The Court, in throwing out the sentence,
decided
that the calculation of losses used by trial judges when
deciding
upon a proper sentence was overstated.
We
are clearly going through a period where the courts are
wrestling
with deciding how individuals involved in corporate fraud
should
be punished. Until this process sorts itself out over time,
some
sentences will be viewed as too severe (such as the one
Mr.
Olis initially received), and many more will be viewed as too
light
by defrauded shareholders.
But
the cost of fraud to shareholders and employees is very real.
Two
recent cases are illustrative. Shareholders at Dana Corp.
(NYSE:
DCN) have been devastated since the auto parts supplier
announced
that it would be restating its financials. Shareholder
litigation
has been brought against the Company on behalf of
shareholders
who purchased the stock between April 21, 2004
and
October 7, 2005.
Another
recent example is AMERIGROUP Corp. (NYSE: AGP)
where
shareholders saw AGP plummet after the Company
revealed
that it failed to account for at least $23 million in
medical
costs in prior quarters. Shareholder litigation has
been
brought against the Company on behalf of investors
who
purchased the stock between April 27, 2005 and
September
14, 2005.
If
you are an investor who is affected investor in Dana,
AMERIGROUP
or any of the cases listed below that are under
investigation,
you may wish to contact is at
info@securitiessleuth.com
to discuss your options.
Cases
Under Investigation
Pixar
(NASDAQ: PIXR)
While
the Company touted the DVD sales of its movie,
The
Incredibles, executives sold over $27 million in Company
stock.
Subsequently, its stock dropped significantly after the
Company
lowered its second quarter guidance and again
after
it announced the commencement of an SEC investigation.
Investors
who purchased Pixar between January 18, 2005
and
August 26, 2005 are affected.
Barrier
Therapeutics (NASDAQ: BTEX)
On
June 29, 2005, Barrier announced that Hyphanox failed to
reach
the primary endpoint of its therapeutic cure in its
Phase
3 trial. BYRX plummeted approximately 45% after
this
disclosure. Investors who purchased BTRX between
April
29, 2004 and June 29, 2005 are affected.
Tempur-Pedic
(NYSE: TPX)
On
September 19, 2005, Tempur-Pedic lowered its financial
guidance
for fiscal 2005. On this news, shares of Tempur-Pedic
common
stock fell $4.68 per share, or 28.5 percent,
on
September 19, 2004, to close at $11.70 per share. It is
alleged
that Tempur-Pedic failed to disclose and misrepresented
material
adverse facts or recklessly disregard them. Investors
who
purchased TPX between April 22, 2005 and
September
19, 2005 are affected.
Tag-It
Pacific, Inc. (AMEX: TAG)
On
August 22, 2005, Tag-It disclosed its reserve for doubtful
accounts
would increase by $6.4 million and its reserves for
inventory
obsolescence would increase by $1.55 million.
On
this news, Tag-It stock fell from a close of $2.32 per share
on
August 12, 2005, to close at $1.37 per share on
August
13, 2005. Investors who purchased TAG between
November
14, 2003 and August 12, 2005 are affected.
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.
Metromedia
Fiber Network, Inc. (MFNX)
Class
Period: January 8, 2001 to July 2, 2001
Claims
Deadline: January 27, 2006 Gilardi
Claims
Administrator: Gilardi
Micromuse,
Inc. (MUSE)
Class
Period: January 18, 2001 to May 17, 2004
Claims
Deadline: January 9, 2006
Claims
Administrator: A.B. Data
Homestore.com
Inc. (HOMS)
Class
Period: January 1, 2000 to Decembr 21, 2001
Claims
Deadline: December 12, 2005
Claims
Administrator: Rust Consulting
Healthtronics
Surgical Services (HRTN)
Class
Period: January 4, 2000 to July 28, 2003
Claims
Deadline: December 31, 2005
Claims
Administrator: Garden City
Contact
info: info@gardencitygroup.com or 800.327.3664
Caminus
Corp. (CAMZ)
Class
Period: February 12, 2002 to July 8, 2002
Claims
Deadline: October 26, 2005
Claims
Administrator: Garden City
Contact
info: info@gardencitygroup.com or 800.327.3664
Canadian
Superior Energy (SNG)
Class
Period: November 1, 2003 to March 11, 2004
Claims
Deadline: November 15, 2005
Claims
Administrator: Gilardi
Comerica,
Inc. (CMA)
Class
Period: July 17, 2002 to October 1, 2002
Claims
Deadline: November 23, 2005
Claims
Administrator: Garden City
Contact
info: info@gardencitygroup.com or 800.327.3664
Quality
Distributions, Inc. (QLTY)
Class
Period: November 6, 2003 to January 18, 2005
Claims
Deadline: December 23, 2005
Claims
Administrator: Garden City
Contact
info: info@gardencitygroup.com or 800.327.3664
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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