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Shares of SFBC International Inc. (Nasdaq: SFCC),
a company that conducts clinical trials for big
pharmaceutical companies, have significantly declined
recently as a series of news articles disclosed
mismanagement and poor oversight of drug trials
which have endangered the health of study participants.
Since November 2, 2005, shares of SFBC, have plummeted
62%, from $41.49 per share to $15.78 per share. A series
of Bloomberg News articles reported that SFBC’s lacked
adequate quality controls, and, as a result, endangered the
safety of patients enrolled in its test – many of whom are
poor immigrants. Bloomberg also reported that the
Company failed to adequately disclose the risks involved
in its drug trials. Another article disclosed that the Company
may have mishandled a clinical trial in Canada and allowed
a tuberculosis patient to infect nine other people.
On December 15, 2005, SFBC shares hit a 52-week low after
the Company cut its 2005 earnings per share estimate to
$1.56 to $1.61, down from a previous forecast of
$1.66 to $1.72 per share. The company also reduced its
full-year revenue estimate range to $329 million to
$330.5 million, from $325 million to $335 million forecast in
November. As of December 16, 2005, SFBC traded at $13.14.
Company analysts have downgraded SFBC stock. One
analyst commented that "We now identify several new
misstatements from management that further shake our
confidence in management, its judgment, and its ability to
deliver upon the new guidance." The Company is also
being investigated by the United Stated Senate. The
U.S. Senate's finance committee has asked SFBC to meet
with the panel to discuss the allegations.
Investors, who purchased SFCC between August 4, 2003
through November 1, 2005, are affected by the recent
revelations.
Independent Auditors Step Forward
On December 20, 2005, SeraCare Life Sciences, Inc.
announced that the Company’s outside independent
auditors Mayer Hoffman McCann P.C. (MHM) had some
significant problems with their review of the Company.
SeraCare Life Sciences Inc. is a manufacturer and provider
of biological products and services to diagnostic, therapeutic,
drug discovery, and research organizations.
Specifically, MHM, the Company’s outside auditor, raised
concerns with respect to the Company's financial statements,
accounting documentation and the ability of MHM to rely
on representations of the Company's management. Among
other things, MHM indicated its perception that certain board
members were exerting undue influence on the Company's
financial reporting process and on the audit process.
This announcement had a quick and dramatic effect on the
market. The Company’s stock has dropped as much as
over 60% in today’s trading. It appears that individuals who
purchased SRLS since February 9 of this year and possibly
earlier have been affected by this news.
Snack Difficulties
On December 19, 2005, Arizona-based Poore Brothers
(NASDAQ: SNAK) which makes Cinnabon, Tato Skins and
other snack foods stunned the market with a series of
revelations.
The Company forecast a fourth quarter loss and announced
that its chief executive officer, Thomas W. Freeze, would
step down immediately. The Company also announced that
Richard M. Finkbeiner, its senior vice president and chief
financial officer, had stepped down effective
December 15, 2005. These announcements had a dramatic
effect on the market and SNAK shares tumbled 20%.
Previously, in November of 2005, Poore Brothers disclosed
accounting errors that would require a restatement of its
earnings for the second quarter of 2005.
Investors who purchased Poore Brothers between
February 10, 2005 and December 16, 2005, are affected.
If you are an affected investor in SFBC International Inc.,
SeraCare Life Sciences, Inc. or Poore Brothers, or an
affected investor in any of the companies listed below
under investigation, you may wish to contact us at
info@securitiessleuth.com so that we can discuss your options.
Cases Under Investigation
Stone Energy Corp. (NYSE: SGY)
On October 8, 2005, Stone Energy stunned the market when
it announced that it intended to take a significant reserve
write-down. This was the result of an internal investigation
into its reserve practices. It has been alleged that, previously,
the Company was materially overstating its financial results
by overvaluing its oil reserves through improper and
aggressive reserve methodologies. Investors who purchased
between June 17, 2005 and October 6, 2005, are affected
Universal American Financial Corp (NasdaqNM: UHCO)
After a period when the Company had been touting its future
while the Company and insiders sold over $200 million in stock,
on October 28, 2005, investors realized the Company’s future
prospects weren't so rosy after a 22% year-over-year decline
in net income was announced. The market reacted strongly
and UHCO stock plummeted by 33%. Investors who purchased
between February 16, 2005 and October 28, 2005 are affected.
NL Industries (NYSE: NL) On November 14, 2005, NL Industries
disclosed that it will restate its financial statement for the year
ended December 31, 2004 and the quarters ended
March 31, 2005 and June 30, 2005. Investors who purchased
NL stock between May 4, 2004 and November 14, 2005 may
be 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.
Cornell Companies, Inc. (CRN)
Class Period: March 6, 2001 to March 5, 2002
Claims Deadline: March 3, 2006
Claims Administrator: Gilardi
Corvis Corp. (CORV)
Class Period: August 22, 2000 to May 25, 2001
Claims Deadline: January 27, 2006
Claims Administrator: Berdon Claims
Ultimate Electronics, Inc. (ULTE)
Class Period: May 1, 2002 to August 26, 2002
Claims Deadline: January 27, 2006
Claims Administrator: Gilardi
Metromedia Fiber Network, Inc. (MFNX)
Class Period: January 8, 2001 to July 2, 2001
Claims Deadline: January 27, 2006
Claims Administrator: Gilardi
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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