NEW YORK, Aug. 19, 2002 (PRIMEZONE) -- A class action Complaint has been filed in the United States District Court for the Southern District of New York, civil action number 02 cv 6439, on behalf of all persons or entities who purchased securities of American Express Company ("American Express" or the "Company") (NYSE:AXP) between July 18, 1999 through July 17, 2001, both dates inclusive (the "Class Period"). American Express Company, Kenneth I. Chenault, Richard Karl Goeltz, Daniel T. Henry, Harvey Golub, David R. Hubers, Gary L. Crittenden, and James M. Cracchiolo are named as defendants in the complaint.
To discuss this action, this announcement, or your rights or interests, please contact plaintiff's counsel, Eric J. Belfi or Sharon Lee, Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-1892, or by e-mail at email@rabinlaw.com.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between July 26, 1999 and July 17, 2001, thereby artificially inflating the price of American Express shares. The complaint alleges that, throughout the Class Period, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's increasing earnings and financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that American Express had made disproportionately large investments in certain speculative high-yield securities. Indeed, in 1997 and 1998, the Company increased its investments in high-yield securities to 10-12% of its portfolio of investments, well beyond the industry norm of 7%; (ii) that the Company's increased investments in certain speculative high-yield securities exposed the Company's investment portfolio to substantial risk in the event default rates in the junk bond market increased; (iii) that the Company lacked the internal controls necessary to monitor its portfolio of high-yield securities such that it was unable to take decisive action should its investments turn against it; and (iv) that as a result of the foregoing, defendants' statements concerning the Company's financial performance and future prospects were materially false and misleading at all relevant times.
On July 18, 2001, before the market opened for trading, American Express issued a press release announcing that its earnings for the second quarter of 2001, the period ending June 30, 2001, would most likely decline 76% from its earnings in the same period of the prior year, in part, because of an $826 million pre-tax charge to recognize "additional write-downs in the high- yield portfolio at American Express Financial Advisors (AEFA) and losses associated with rebalancing the portfolio towards lower-risk securities." In a conference call following this announcement, defendant Chenault explained that the Company had increased its investments in high-risk junk bonds in 1997 and 1998 to between 10% and 12% of its portfolio and would now be scaling it back to 7%, which is the industry average.
Plaintiff is represented by the law firm of Rabin & Peckel LLP. Rabin & Peckel LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States. You can learn more information about Rabin & Peckel LLP at www.rabinlaw.com.
If you purchased securities of American Express during the Class Period described above, you may, no later than September 16, 2002, move the Court to serve as lead plaintiff. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this action as a lead plaintiff online at www.rabinlaw.com. Contact plaintiffs' counsel Eric J. Belfi or Sharon Lee of Rabin & Peckel LLP to further discuss this action, this announcement, or your rights or interests.
More information on this and other class actions can be found on the Class Action Newsline at http://www.primezone.com/ca