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Case ID: 2528 | Stocks | 07/12/2004
A class action has been filed against direct-to-consumer specialty medical products provider PolyMedica Corporation (Nasdaq: PLMD) and certain of its officers and directors by stockholders who purchased the company's common stock between July 23, 2001, and June 30, 2003. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
Throughout this time period, the defendants issued statements and press releases, and filed quarterly and annual reports with the SEC, describing the company's business operations and financial condition. Allegedly, these representations were materially false and misleading because they failed to disclose that, throughout this time period, the company had materially misstated its operating earnings. Specifically, during the relevant time period, it has been reported that PolyMedica overstated earnings by capitalizing direct response advertising costs related to the acquisition of new customers rather than expensing them as incurred. Consequently, PolyMedica recorded such advertising costs as assets rather than as expenses. By accounting for these expenses as assets, PolyMedica could spread the cost over a two- to four-year period rather than accounting for the expense in the quarter in which they were incurred. This allowed PolyMedica to understate operating expenses, overstate assets, and create a false impression of operating efficiencies, with the overall effect being that the company misled investors concerning its growth and earnings. This contrivance violates Generally Accepted Accounting Principles and the SEC has closely scrutinized this practice. On June 30, 2003, after the stock market closed, PolyMedica issued a press release announcing that, as a result of discussions with the SEC regarding the expensing of the company's direct response advertising costs, PolyMedica might be forced to restate results for its fiscal years 2002 and 2003. The company said the restatement would reduce its fiscal 2002 earnings to $1.76 from $2.38 per share, a reduction of 26%; its fiscal 2003 to $2.61 from $3.21, a reduction of 19%; and fiscal 2004 first quarter earnings expectations to $.66-.72 from $.84-.90. On this news, shares of PolyMedica, which had closed at $45.86 on June 30, 2003, opened for trading on July 1 at $38.56, down $7.30, or 15.9%. PolyMedica shares closed later that day at $37.39 per share for a loss of $8.47 per share, or 18.5%. At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest A class action has been filed against cancer information company IMPATH, Inc. (Nasdaq: IMPH) and certain of its officers and directors by stockholders who purchased the company's common stock between April 25, 2001, and July 29, 2003. The parties have reached a tentative settlement in several consolidated class actions filed against electric power generation systems developer Plug Power, Inc. (Nasdaq:PLUG) and certain of its officers and directors by stockholders who purchased the company's common stock between February 14, 2000, and August 2, 2000. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. Persons eligible to take part in the settlement should contact attorneys for the class for more information. Several class actions have been filed against Citigroup, Inc., the owner and operator of the Salomon Brothers and Smith Barney Mutual Funds, and certain company officers and directors by investors who purchased shares of Smith Barney and Salomon Brothers funds between March 22, 1999, and March 22, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. According to a press release dated December 13, 2008, the complaint alleges violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and names as defendants China Organic and certain of its officers and directors. A class action has been filed against Maxim Pharmaceuticals, Inc., a global biopharmaceuticals company (NASDAQ:MAXM) and certain of its officers and directors by stockholders who purchased the company’s common stock between November 11, 2002 and September 17, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company’s securities. The stockholder seek to recover compensatory damages for the loss of value of their stock. Dave & Buster's, Inc., a leading operator of upscale restaurants and entertainment complexes, agrees to the terms of a proposed settlement and plans to settle a class action lawsuit filed on January 20, 2006. The lawsuit opposed the Company's planned merger with an affiliate of Wellspring Capital Management. |
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