ATLANTA, Feb. 27, 2002 (PRIMEZONE) -- Holzer & Holzer announced today that the firm has filed a class action lawsuit in the United States District Court for the District of Colorado on behalf of purchasers of Rhythms NetConnections, Inc. (OTCBB:RTHMQ) ("Rhythms" or the "Company") publicly traded securities during the period between January 6, 2000 and April 2, 2001, inclusive (the "Class Period"). A copy of the Complaint filed is available from the Court or by contacting Holzer & Holzer (toll-free) at (888) 508-6832 or by sending an e-mail to michaelfisteljr@msn.com.
The Complaint alleges that Rhythms and certain of its officers and directors issued a series of material misrepresentations to the market. Throughout the Class Period, the Complaint alleges, Rhythms portrayed itself as a fast-growing provider of DSL services and repeatedly represented that it could continue to expand its broadband network throughout the United States and reassured investors that it was financially able to continue this expansion.
As alleged in the Complaint, defendants' statements issued throughout the Class Period were materially false and misleading when made as they failed to disclose the following adverse facts which were then known to defendants or recklessly disregarded by them: (i) that Rhythms lacked the financial resources necessary to execute its business plan of a full national network expansion; (ii) that the Company's efforts to scale back its expansion plans were not meeting with success as the Company was unable to generate the necessary financing; (iii) that Rhythms was not well-funded or well-positioned to continue its growth, as the Company's expenses, including its ongoing debt payment obligations, were far outpacing its revenues and rapidly depleting the Company's cash reserves; (iv) that the Company did not have adequate cash reserves and was not sufficiently "stable" and "financially strong" that it would be able to fund Rhythm's operational needs into the first quarter of 2002, as defendants repeatedly promised investors -- defendants were not even able to keep Rhythms running through 2001, as it had earlier guaranteed; and (v) that without the influx of additional capital, Rhythms would be forced to seek bankruptcy protection, which would render Rhythms common stock essentially worthless.
The Complaint further alleges that while in possession of the true facts about Rhythms and its business, the Individual Defendants and other Rhythms insiders collectively sold 600,000 shares of Rhythms common stock for gross proceeds in excess of $16 million.
If you purchased securities in Rhythms during the Class Period set forth above, you may, no later than March 11, 2002, move the Court to serve as a lead plaintiff in the action. In order to serve as a lead plaintiff, however, you must meet certain legal requirements. If you have any questions about your rights with respect to this lawsuit, you may contact Holzer & Holzer, Michael I. Fistel, Jr., Esq. (toll-free) at (888) 508-6832, or inquire via e-mail to michaelfisteljr@msn.com. Holzer & Holzer has substantial experience representing investors in securities fraud class action lawsuits such as this. Holzer & Holzer is located in Atlanta, GA, but represents investors in securities class action lawsuits throughout the nation.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca