Stockholders v RH Donnelley Corporation
Stockholders File Lawsuit Against RH Donnelley Corporation
According to a press release dated October 23, 2009, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Companys business and financial results. Defendants caused the Company to fail to properly account for its bad debt expense and timely write down its impaired goodwill.
As a result of defendants false and misleading statements, RH Donnelleys stock traded at artificially inflated prices during the Class Period, trading as high as $66.67 in July 2007. However, beginning in February 2008, defendants began to acknowledge problems in the Companys operations and with its financial results. On March 12, 2009, RH Donnelley announced that it had retained a financial advisor to assist in the evaluation of its capital structure, including various balance sheet restructuring alternatives. Then, on May 29, 2009, RH Donnelley filed for bankruptcy. The stock now trades at around six cents per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was not adequately reserving for its bad debts in violation of GAAP, causing its financial results to be materially misstated; (b) the downward pressure the Company was experiencing with its advertising revenue was not exclusively due to cyclical challenges, as represented, but was also due to a permanent shift in customers moving away from print yellow pages advertising; (c) the Company had far greater exposure to liquidity concerns and ratings downgrades than it had previously disclosed; and (d) given the turmoil in the economy and the trends related to a shift away from print advertising, the Company had no reasonable basis to make projections about its 2008 results.
If you bought RH Donnelley Corporation securities and would like to obtain information about the RH Donnelley Corporation lawsuit, then you are invited to call Kahn Swick & Foti, LLC toll free at (866) 467-1400 extension 100 to speak with an attorney or visit www.ksfcounsel.com.
