Several class actions have been filed against investment firm Security Brokerage, Inc. and Daniel G. Calugar, its president and majority owner, by investors who purchased shares of Alliance Capital Management's (NYSE:AC) AllianceBernstein Family of mutual funds and Massachusetts Financial Services' Family of mutual funds, which is a subsidiary of Sun Life Financial, Inc. from January 1, 2001, through September 30, 2003. The actions claim that the defendants violated federal securities laws by engaging in an illegal market-timing scheme. The investors seek to recover compensatory damages for the loss of value of their stock.

The action alleges that from at least 2001 to September 2003, Calugar, trading through Security Brokerage, engaged in a scheme involving market timing of various mutual funds using investments totaling between $400-$500 million. Market timing refers to the practice of short term buying and selling of mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Most of Calugar's market timing trades were allegedly through two mutual fund families: Alliance Capital Management, LP and Massachusetts Financial Services.

Calugar also engaged in late trading of the funds. Late trading refers to the practice of placing orders to buy or sell mutual fund shares after close of market at 4:00 p.m. EST, but at the mutual fund's Net Asset Value ("NAV"), or price, determined at the market close. Late trading enables the trader to profit from market events that occur after 4:00 p.m. EST but that are not reflected in that day's price. Because of Security Brokerage's status as a broker-dealer, it was permitted to submit trades received from its clients before 4:00 pm EST to the National Securities Clearing Corporation ("NSCC") after 4:00 p.m. EST. Calugar and Security Brokerage thus participated in a scheme with Alliance and MFS to engage in market timing that most other fund investors were not permitted to do. Calugar and Security Brokerage made allegedly trading profits of $175 million from their market timing and late trading at Alliance and MFS.

On December 22, 2003, the SEC filed civil fraud charges against Security Brokerage and Calugar for their participation in the scheme to defraud mutual fund shareholders through improper late trading and market timing. On December 24, 2003, the SEC announced that United States District Judge Robert Clive Jones of the District of Nevada issued a temporary restraining order freezing the assets of the defendants, prohibiting the destruction of documents, and granting expedited discovery.

If you bought Alliance Capital or Massachusetts Financial Services funds between January 1, 2001, through September 30, 2003, you may qualify to serve as a lead plaintiff. Lead plaintiff papers must be filed with the court no later than March 5, 2004. If you would like to consider serving as lead plaintiff or have any questions about the lawsuit, you may retain your own counsel, or rely upon the attorneys who have already filed actions. Alternatively, you may do nothing, and remain a silent member of the proposed class.