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Case ID: 5079 | Stocks | 07/18/2008
According to a press release dated April 2, 2008, the Complaint alleges that E*TRADE violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by deceiving investors about the investment characteristics of auction rate securities and the auction market in which these securities traded. Auction rate securities are either municipal or corporate debt securities or preferred stocks which pay interest at rates set at periodic “auctions.” Auction rate securities generally have long-term maturities or no maturity dates.
The Complaint alleges that, pursuant to uniform sales materials and top-down management directives, E*TRADE offered and sold auction rate securities to the public as highly liquid cash-management vehicles and as suitable alternatives to money market mutual funds. According to the Complaint, holders of auction rate securities sold by E*TRADE and other broker-dealers have been unable to liquidate their positions in these securities following the decision on February 13, 2008 of all major broker-dealers to “withdraw their support” for the periodic auctions at which the interest rates paid on auction rates securities are set. The Complaint alleges that E*TRADE failed to disclose the following material facts about the auction rate securities it sold to the class: (1) the auction rate securities were not cash alternatives, like money market funds, but were instead, complex, long-term financial instruments with 30 year maturity dates, or longer; (2) the auction rate securities were only liquid at the time of sale because broker-dealers were artificially supporting and manipulating the auction rate market to maintain the appearance of liquidity and stability; (3) broker-dealers routinely intervened in auctions for their own benefit, to set rates and prevent all-hold auctions and failed auctions; and (4) E*TRADE continued to market auction rate securities as liquid investments after it had determined that broker dealers were likely to withdraw their support for the periodic auctions and that a “freeze” of the market for auction rate securities would result. If you bought E*TRADE Financial Corporation securities and would like to obtain information about the E*TRADE Financial Corporation lawsuit, then you are invited to call Kahn Gauthier Swick, LLC toll free at (866) 467-1400 to speak with an attorney or visit www.kgscounsel.com. 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 Willbros Group, Inc. (NYSE:WG), certain of its officers and directors by stockholders who purchased the company's common stock between May 06, 2002 and May 16, 2005. 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. Several class actions have been filed against energy holding company TECO Energy, Inc. (NYSE:TE), and certain of its officers and directors by stockholders who purchased the company's common stock between October 30, 2001, and February 4, 2003. 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. Several class actions have been filed against financial services organization American Business Financial Services, Inc. (Nasdaq: ABFI) and certain of its officers and directors by stockholders who purchased the company's common stock between January 27, 2000, and June 25, 2003. 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. Several class actions have been filed against online pharmacy drugstore.com, Inc., (Nasdaq:DSCM) and certain of its officers and directors by stockholders who purchased the company's common stock between January 20, 2004, and June 10, 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. A class action has been filed against ProQuest Company (PQE), certain of its officers and directors by stockholders who purchased the company's common stock between January 9, 2003 and February 8, 2006. 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. On March 14, 2008, several motions to appoint lead plaintiffs and to approve the selection of counsels were filed. As a result, an order consolidating related actions, to appoint certain individuals as lead plaintiffs and counsels was entered on April, 28, 2008. However, at the same time, certain individuals were denied by the court to be appointed lead plaintiffs by Judge Robert S. Lasnik.
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