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Case ID: 5094 | Stocks | 07/18/2008
According to a press release dated April 18, 2008, on April 18, The New York Times reported that New York Attorney General Andrew M. Cuomo is investigating how auction rate securities were marketed to municipalities and public entities, and his office has subpoenaed 18 banks that underwrote and brokered auction rate securities, including Goldman Sachs Group, Inc. In addition, securities regulators from nine other states have formed a task force investigating how banks disclosed the risks of auction failures to investors, and the Financial Industry Regulatory Authority, working with the Securities and Exchange Commission, has initiated an inquiry into sales practices in the auction rate securities industry.
The Complaint charges Goldman Sachs with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and dissemination of materially false and misleading statements concerning auction rate securities caused those securities to be overvalued and artificially inflated, inflicting damages on investors. Goldman Sachs provides investment banking, securities, and investment management services to corporations, financial institutions, governments and high-net-worth individuals worldwide. The Complaint alleges that defendants represented to investors that auction rate securities (also known as auction rate preferred stock, variable rate preferred securities, money market preferred securities, periodic auction rate securities and auction rate bonds) were equivalent to cash or money market funds, and highly liquid investments suitable for short-term investing. Defendants knew, but failed to disclose to investors, material facts about auction rate securities. Specifically, the Complaint alleges that defendants failed to disclose: (i) that auction rate securities were not cash alternatives, but actually were complex, long-term financial instruments with 30-year maturity dates or no maturity at all; (ii) that auction rate securities were only liquid at the time of sale because the auction market was artificially supported and manipulated by various broker-dealers to maintain the appearance of liquidity and stability; and (iii) that auction rate securities would become illiquid as soon as the broker-dealers stopped maintaining the auction market. On February 13, 2008, approximately 87% of all auctions of auction rate securities failed when all major broker-dealers refused to continue to support the auctions. As a result of the withdrawal of support by all of the major broker-dealers, the market for auction rate securities collapsed, leaving the holders of these auction rate securities with no commercially reasonable means of liquidating the investments defendants offered and sold as a suitable alternative to money market funds and other short-term cash management vehicles. On April 9, 2008, in a 10-Q filing with the SEC, Goldman Sachs acknowledged it has received requests for information from "various governmental agencies and self-regulatory organizations relating to certain auction products...and the related recent failure of such auctions." The New York Attorney General also is investigating how banks brokered auction rate securities and how they decided to allow some auctions to fail in February while supporting others.
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 On June 23, 2008, the Court entered the Memorandum and Order consolidating the action and approving the motion to appoint Western Washington Laborers-Employers Pension Trust as lead plaintiff and approving lead plaintiff’s selection of Coughlin Stoia Geller Rudman & Robbins as lead counsel and Dysart Taylor as liaison counsel. A class action has been filed against H&R Block, Inc. (HRB), certain of its officers and directors by stockholders who purchased the company's common stock between January 31, 2005 and March 14, 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. A class action has been filed against PXRE Group Ltd. (PXT), certain of its officers and directors by stockholders who purchased the company's common stock between July 28, 2005 and February 16, 2006 or a secondary offering on October 3, 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. A class action has been filed against pharmaceutical company Gilead Sciences, Inc. (Nasdaq: GILD) and certain of its officers and directors by stockholders who purchased the company's common stock between July 14 and October 28, 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. On June 23, 2008, the Judge Victor Marrero granted the motion to appoint Iowa Public Employees' Retirement System; Policemen's Annuity & Benefit Fund of Chicago; Central States, Southeast, Southwest Areas Pension Fund; and State-Boston Retirement System as lead plaintiffs. Further, according to the order, the law firms of Barrack, Rodos & Bacine and Cohen, Milstein, Hausfeld & Toll, P.L.L.C. are approved to serve as co-lead counsel.
A class action has been filed against Ionatron, Inc. (IOTN), certain of its officers and directors by stockholders who purchased the company's common stock between June 27, 2005 and May 10, 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. |
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