MILWAUKEE, Dec. 27, 2001 (PRIMEZONE) -- The law firm of Ademi & O'Reilly, LLP, announce that a federal class action lawsuit was filed today against Ernst & Young, LLP, the auditors of the Van Wagoner Funds (Nasdaq:VWEGX) family of mutual funds, along with the other defendants listed below. The suit was filed on behalf of purchasers of shares between April 28, 2000 and June 30, 2001, inclusive. A copy of the complaint is available from Ademi & O'Reilly, LLP, or the District Court Clerk's Office.
The action, numbered 01C1296, is pending in the United States District Court, Eastern District of Wisconsin against defendants Van Wagoner Funds, Inc., Van Wagoner Capital Management, Inc., Sunstone Financial Group, Inc., Van Wagoner Emerging Growth Fund, Garrett R. Van Wagoner, Larry P. Arnold, Robert S. Colman and Ernst and Young, LLP. The Honorable Charles N. Clevert is presiding over the case.
The complaint alleges that Ernst & Young, LLP failed to follow Generally Accepted Accounting Practices and Generally Accepted Auditing Standards, by specifically approving the changes in net assets utilized by Van Wagoner between the end of 1999 and the end of 2000. The complaint also alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing materially false and misleading Registration Statements and Prospectuses. Defendants issued materially false and misleading statements concerning the Fund's net asset value ("NAV") and performance. These statements were materially false and misleading because (1) the NAV of the Fund was materially overstated as the Fund had overvalued a material portion of their holdings of certain private placement investments; (2) the Fund's performance was materially overstated as those figures were based on the Fund's NAV; and (3) the risk of investing in the Fund was materially understated as the Fund had failed to disclose the true risk attendant to its portfolio securities and specifically the private placement investments. Accordingly, defendants' statements about the risks associated with investing in the Fund were not meaningful because they failed to advise investors that the Fund was materially overstating its NAV.
On June 30, 2001, defendants' gross overvaulation of the private placement investments was disclosed when defendants revalued nine such private placement investments originally valued at $28.6 million on December 31, 2000 to a total of $9.00 and marked down an additional two holdings by precisely 50% or 75%. During the class period, the Fund's value decreased by approximately 75%.
If you bought shares of the Fund between April 28, 2000 and June 30, 2001, you may, no later than February 16, 2002, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. To be appointed lead plaintiff the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. One or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by serving as a lead plaintiff. You may retain Ademi & O'Reilly, LLP, or other counsel of your choice.
If you wish to discuss this action with us, or have any questions concerning this notice of your rights and interests, please contact Ademi & O'Reilly, LLP, Robert O'Reilly, Esq.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.