NEW YORK, Jan. 29, 2003 (PRIMEZONE) -- Please take notice that the law firm of Kirby McInerney & Squire, LLP has commenced a class action lawsuit in the United States District Court for the District of Utah on behalf of all purchasers of ClearOne Communications, Inc. securities (Nasdaq:CLRO) during the period from January 1, 2001 through January 15, 2003 (the "Class Period"). The action seeks to recover losses suffered by such investors.
A copy of the complaint is available from the Court or from Kirby McInerney & Squire. Please visit our website, which offers summary and detailed information concerning the case at www.kmslaw.com/new_cases/clearone/clearone.htm, or contact us by phone at (888) 529-4787 or by email at obraun@kmslaw.com.
The complaint asserts claims for violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 against ClearOne Communications, Inc. ("ClearOne"), as well as its Chief Executive and Chief Financial Officers. The alleged violations, according to the complaint, stem from materially false and misleading statements made by the defendants during the Class Period that, as detailed below: (i) materially misrepresented ClearOne's financial performance; thereby (ii) causing ClearOne securities to trade at artificially-inflated prices.
According to the complaint, during the Class Period, defendants caused ClearOne to report materially inflated revenues, earnings, and accounts receivable by secretly engaging in "channel stuffing" -- a practice in which (i) extra products are shipped to distributors; while (ii) revenue is booked as if those products "stuffed" through the sales channel had been sold; even though (iii) those products had not been sold.
Thus, as the complaint alleges, although ClearOne was in fact not growing at all, its secret stuffing of the sales channels allowed ClearOne to report dramatic (but false) revenue and earnings growth during the class period. Net income for fiscal 2002 alone was overstated by at least 23%. The complaint charges that defendants' material inflation of ClearOne's reported financial results supported ClearOne's stock price at artificially-inflated levels at which it otherwise would not have traded (generally, between $10 and $20 per share). Defendants then took advantage of ClearOne's inflated stock price when, on December 11, 2001, defendants raised $25.5 million from a private offering of 1.2 million ClearOne shares.
On January 15, 2003, ClearOne stock lost approximately 60% of the value remaining to it after it was revealed that the SEC had filed a detailed complaint alleging violations of the securities laws by ClearOne and its CEO and CFO. Currently, as the complaint alleges, ClearOne stock has declined more than 90% from the price levels to which defendants had inflated it during the Class Period.
Plaintiffs are represented by Kirby McInerney & Squire, LLP, which specializes in complex litigation, including securities class actions. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and its achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, class actions in general or about the role of the lead plaintiff in a securities class action can be obtained through Kirby McInerney & Squire's website at www.kmslaw.com.
If you are a member of the class described above, you may, no later than March 17, 2003, move the Court to serve as lead plaintiff of the class, if you so choose, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. section 78u-4(a). A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. 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 seek appointment as a lead plaintiff. For more information about the case, its claims, and your rights, please contact:
Ira M. Press, Esq. Ori Braun KIRBY McINERNEY & SQUIRE, LLP 830 Third Avenue, 10th Floor New York, New York 10022 Telephone: (212) 317-2300 or Toll Free (888) 529-4787 E-Mail: obraun@kmslaw.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.