PHILADELPHIA, Nov. 1, 2004 (PRIMEZONE) -- Lead Counsel, Much Shelist Freed Denenberg Ament & Rubenstein P.C. and Spector, Roseman & Kodroff, P.C. announce that the United States District Court for the Northern District of Illinois denied the defendants' motion to dismiss in part on September 24, 2004, allowing the class action to proceed against certain defendants and allowing plaintiffs to file a second amended complaint. The class is defined as all persons and entities who (1) purchased, pursuant to a prospectus, securities issued by Sears Roebuck Acceptance Corporation ("SRAC") (NYSE:SRJ) between October 24, 2001 and October 17, 2002 (the "Class Period") and (2) those who purchased during the Class Period, the publicly traded securities issued by SRAC before the Class Period and actively traded through the public markets and over national stock exchanges. The Second Amended Complaint will be filed on November 15, 2004.
The Complaint alleges that Sears, SRAC and the Individual Defendants violated Sections 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and Sections 11, 12(a) and 15 of the Securities Act of 1933, by issuing a series of materially false and misleading statements to the market and in connection with the issuance of securities issued by SRAC. These alleged misstatements had the effect of artificially inflating the price of the securities publicly traded.
The Complaint further alleges that defendants, throughout the Class Period, represented that the earnings of Sears, the corporate parent of SRAC, were growing strongly, driven by Sears' Credit and Financial Products segment and that Sears would achieve earnings growth of 22% in 2002 over 2001. In addition, in SEC filings and the 2001 Annual Report filed both by Sears and SRAC during the Class Period, the companies reported that reserves set up for uncollectible accounts were "adequate."
These, and other statements detailed in the Complaint, were allegedly false and misleading because, according to the Complaint, they did not disclose that Sears' risk for uncollectible accounts had increased materially throughout the Class Period and, in addition, that Sears was under-reserving for its uncollectible accounts which inflated its earnings and balance sheet. On October 17, 2002, Sears reported in a press release that it will grow its 2002 earnings by 15%, rather than the 22% it reaffirmed as recently as ten days previously, because of a "$222 million increase in the domestic provision for uncollectible accounts." In addition, according to the press release, earnings for the third quarter were 26% less than the previous year. In reaction to the press release, the prices of the SRAC securities fell on extremely heavy trading volume.
Plaintiffs seek to recover damages on behalf of all those who purchased the securities issued by Sears Roebuck Acceptance Corporation during the Class Period.
If you have any questions regarding this litigation, or your rights or interests, please contact Carol V. Gilden at Much Shelist cgilden@muchshelist.com or Robert M. Roseman at Spector, Roseman & Kodroff, P.C. at classaction@srk-law.com.
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.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered through judgments and settlements on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.