A class action has been filed in the Eastern District Court of Michigan against Valassis Communications, Inc., a Michigan based company that markets and distributes coupons and newspaper advertising inserts (NYSE:VCI), and certain of its officers and directors by stockholders who purchased the company's common stock between April 25, 2002 and October 23, 2002. 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.

Specifically, the complaint alleges that throughout the Class Period, defendants issued materially false and misleading statements concerning the Company's performance and future prospects, causing Valassis' shares to trade at artificially inflated levels. As alleged in the complaint, these statements were materially false and misleading because defendants knew, but failed to disclose: (i) that the price increase implemented by the Company in 2001 in its FSI business and then retracted in February 2002 was negatively impacting the Company's ability to win contracts; (ii) that the Company was experiencing increased competition from News America who was offering customers lower prices and longer contract terms; and (iii) based on the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and their earnings forecasts which were false when made.
On October 24, 2002, Valassis released its financial and operational results for the third quarter ended September 30, 2002, and announced that it would dramatically lower its earnings' guidance for 2003 to $2.22 per share, well below analysts' consensus of $2.70 per share. This news caused the Company's stock to fall from $34.96 to $26.01, a decline of more than 25%.