CHICAGO, Oct. 3, 2002 (PRIMEZONE) -- Much Shelist Freed Denenberg Ament & Rubenstein, P.C. announces that a class action lawsuit is pending in the United States District Court Eastern District of Texas, Texarkana Division on behalf of purchasers of the securities of Electronic Data Systems Corporation (NYSE:EDS) ("EDS" or the "Company") between September 7, 1999 and September 24, 2002, inclusive ("Class Period").
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 September 7, 1999 and September 24, 2002, thereby artificially inflating the price of EDS securities. Specifically, defendants issued numerous statements that highlighted the Company's strong financial performance and reassured investors that the Company's "business and financial fundamentals are sound," and the Company's balance sheet is "rock solid."
Much Shelist is currently investigating these claims. If you wish to discuss your rights and interests, or if you have information relevant to the lawsuit, you may contact Carol V. Gilden or Michael E. Moskovitz at Much Shelist Freed Denenberg Ament & Rubenstein, P.C., by calling a toll-free number 1-800-470-6824, or by sending an e-mail to investorhelp@muchshelist.com. Your e-mail should refer to EDS.
As alleged in the complaint, defendants' materially false and misleading statements failed to disclose and/or misrepresented, among other things, that:
(a) the Company's program to "manage" its future stock issuance under its employee stock option program was essentially an unhedged bet on the price of EDS common stock, which was exposing the Company to substantial liabilities that were not reflected in the Company's financial statements;
(b) the Company was recording and reporting as assets (e.g. accounts receivable), and as revenue, purported receipts from contracts structured as percentage-of-completion payment arrangements where the requirements of Generally Accepted Accounting Principles ("GAAP") for such recording were not met and where sufficient evidential matter did not exist to support the claimed positive impact on EDS's books;
(c) the Company improperly recorded revenue on contracts for software that did not meet GAAP requirements for such revenue recognition; and
(d) the Company was experiencing difficulties with certain of its European contracts such that these contracts were not performing according to the Company's expectations.
On September 18, 2002, EDS shocked the market by announcing that it expects "revenues and earnings for its third quarter of 2002 to be lower than company guidance." In response, the price of EDS common stock dropped sharply, falling from $36.46 per share to $17.20 per share. Then, on September 24, 2002, certain analysts downgraded their rating on EDS stock, citing the Company's obligations on certain put contracts and that in order to close out the position, EDS would have to pay $225 million. EDS issued a press release and acknowledged that it had borrowed money in the commercial paper markets to close out the put contracts. In later public comments, an EDS spokesperson confirmed that the Company borrowed $225 million. In response to these announcements, the price of EDS common stock plunged further, falling from the previous day's close of $16.52 per share to close at $11.68 per share.
If you purchased EDS securities during the Class Period and if you meet certain other legal requirements, you may file a motion in the court where the lawsuit has been filed to serve as a lead plaintiff. You must file your motion no later than November 25, 2002.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order 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. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. Section 78u-4).
Much Shelist's history is one of experience, leadership and results. For more than 25 years, Much Shelist has represented plaintiffs in class action litigation in federal and state courts across the United States. The firm has successfully prosecuted cases involving securities fraud, antitrust violations, consumer fraud, unlawful business practices and insurance company fraud. Under Much Shelist's leadership, class members have obtained judgments and settlements in excess of $4 billion.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca