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Decades ago, politicians, business leaders and policymakers
would say “What is good for General Motors, is good for the
country.”
Oh, how much GM (NYSE: GM) investors and workers wish
that was still the case. But it’s not. Both groups have been
rocked by two recent events. First, on November 9, 2005
after the close of markets, GM disclosed, among other things,
that its net income from continuing operations for 2001 was
overstated by approximately $300 million to $400 million
and that on November 8, 2005, the Audit Committee of the
Board of Directors concluded that investors should no longer
rely on GM’s previously filed financial statements for that
year. In other words, GM would have to massively restate
its financials.
Second, at the beginning of this week, GM announced it
would cut around 30,000 jobs and close its operations at
nine North American plants.
So, it appears that for the past few years, rather than face
reality; GM fudged its numbers. When GM finally had to
come clean these past weeks, we knew who would be
negatively affected. Not GM’s self-serving management,
but its investors and workers. Specifically, GM investors
who purchased GM between April 17, 2001 and
November 9, 2005, are affected and such affected investors
are urged to contact us.
Isn’t overstating earnings by $300 or $400 million is a big
“mistake” and shouldn’t those responsible be held accountable?
A Weak Link
Interlink Electronics Inc. (NasdaqNM: LINK) engages in the
development, manufacture, marketing, and sale of intuitive
interface devices and components for business and home
applications.
Perhaps, accounting is the weak link at California-based
Interlink Electronics where its investors have experienced
not one, but two restatements this year. First, on
March 9, 2005, Interlink announced it would restate its
financial results for the first three quarters of 2004 to
correct several instances of improper accounting. Then,
on November 2, 2005, Interlink shocked investors a second
time by announcing it was again restating its financial
statements -- this time for all of 2003 and 2004 and for
the first two quarters of 2005. This news shocked the
market and Interlink shares plummeted 40%. Investors
who purchased LINK between April 24, 2003 and
November 1, 2005, are affected.
Ciphergen Biosystems Will Restate
Ciphergen Biosystems (NASDAQ: CIPH) engages in the
development, manufacture, and marketing of a family of
ProteinChip Systems and services for clinical, research,
and process proteomics applications for life science
researchers. The Company sells its products primarily to
biologists in pharmaceutical and biotech companies.
On November 16, 2005, after the close of the market,
the Company announced that its Audit Committee had
determined that results in the Quarterly Report for the
quarter ended June 30, 2005 should be restated to recognize
revenue in a manner consistent with the Company’s revenue
recognition policy. The following day, its stock plummeted
more than 20%. Investors who purchased CIPH between
February 17, 2005 and November 16, 2005, may be affected.
Another Drug Company with Accounting Revisions
Investors have been repeatedly stung as a string of drug
companies have plummeted after they “revised” their
financials. The latest example is Israel-based Taro
Pharmaceuticals Industries (NASDAQ: TARO). The
Company engages in the development, manufacturer,
and marketing of prescription and over-the-counter
pharmaceutical products.
On November 17, 2005, prior to the opening of the market,
Taro disclosed that it had revised its accounting treatment
for revenue received in the sale of inventory in a three-year
contract and its stock declined approximately 34% in heavy
trading. Investors who purchased Taro between
April 26, 2005 and November 17, 2005, may be affected.
Other Cases Under Investigation
Blockbuster (NYSE:BBI)
On August 9, 2005, Blockbuster reported a second-quarter
net loss well below analyst estimates; a negative free cash
flow, and that it was abandoning its 2005 guidance. More
bad news would soon follow which would cause Blockbuster
shares to further plummet. On August 8, 2005, the Company
announced that it had been forced to amend its credit facility
to provide for a waiver of its leverage ratio covenants.
Finally, on November 8, 2005, it was disclosed in SEC filings that
Blockbuster may not have sufficient cash flows from operating
activities, cash on hand and available borrowings under its credit
facilities to service its indebtedness.
Class action litigation has been brought on behalf of all persons
who acquired Blockbuster pursuant to the Company's exchange
offer of Viacom stock for 144 million common shares of Blockbuster
and on behalf of those who purchased Blockbuster between
September 8, 2004 and August 9, 2005.
Guidant Corp. (NYSE: GDT)
On June 17, 2005, the FDA issued a nationwide recall notification
impacting Guidant's implantable defibrillators and cardiac
resynchronization therapy defibrillators. On November 3, 2005,
the Attorney General of the State of New York filed a complaint,
alleging "repeated and persistent fraud" by the Company in
Connection with its defibrillator sales. Investors who purchased
GDT between December 15, 2004 and November 3, 2005, are
affected.
Motive, Inc. (Nasdaq: MOTV)
On October 27, 2005 the Company announced it would restate
its financial results for the quarters ended March 31, 2005,
and June 30, 2005, and the six-month period ended
June 30, 2005. Investors who purchased MOTV between
April 21, 2005 and June 30, 2005, are affected.
First BanCorp (NYSE: FBP)
First BanCorp shareholders recently have seen their stock
tumble as a result of a series of negative developments.
First, the Company announced that it had received a letter
from the SEC indicating that it was conducting an informal
inquiry into the Company. Second on September 30, 2005,
the Company announced that its President and CEO was
stepping down and its CFO had also resigned her position.
Investors who purchased between March 31, 2003 and
October 25, 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
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
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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