NEW YORK, April 20, 2005 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action suit on behalf of all purchasers of the common stock of Electronic Arts, Inc. ("Electronic Arts" or the "Company") (NASDAQ:ERTS) from January 25, 2005 to March 21, 2005, both dates inclusive (the "Class Period").
The action, entitled Raspa v. Electronic Arts, Inc. et al., Case No. (not yet assigned), is pending in the United States District Court for the Northern District of California, and names as defendants, the Company, its Chairman of the Board and Chief Executive Officer, Lawrence F. Probst, III, and its Executive Vice President, Chief Financial and Administration Officer, Warren Jenson. A copy of the Complaint can be obtained from the Court or can be viewed on Wechsler Harwood web site at: www.whesq.com.
The Complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the Complaint alleges that defendants issued a series of materially false and misleading statements contained in press releases and filings with the Securities and Exchange Commission during the Class Period. According to the Complaint, the defendants disseminated knowingly false favorable projections for the Company's fourth quarter, ending on March 31, 2005, so that they could sell their personally held Electronic Arts stock at artificially inflated prices.
On January 25, 2005, defendants issued a press release and held an investors' teleconference wherein they reiterated previously issued, and very positive, performance projections for the Company's fourth quarter of 2004. In reaction to this announcement, the price of Electronic Arts stock jumped by $5.30 per share in one day. However, less than three days after releasing this news, insiders began dumping their personally held Electronic Arts stock - a total of 926,739 shares - for gross proceeds of $58,460,483.
Then, on March 21, 2005, prior to the open of trading, the Company announced that its results for the quarter would be materially less than was previously announced. In a telephone interview with Bloomberg News, defendant Jenson, who himself sold 200,000 shares during the Class Period, attributed the shortfall to poor sales of holiday releases. The market reacted swiftly to this announcement, sending the price of Electronic Arts common stock plummeting $11.20 per share, or 16.8%, on unusually high trading volume of over 39.5 million shares.
According to the complaint, when defendants were dumping their personally held stock just days after offering glowing projections, they were aware that the 2004 holiday releases did not meet expectations and that the quarter's results would be substantially off their stated projections. Rather than disclose this news to investors, defendants chose instead to sell their artificially inflated shares for tens of millions in proceeds.
If you are a member of the class described above, you may, not later than May 27, 2005, move the Court to serve as lead plaintiff of the class, if you so choose. 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. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400
Craig Lowther, Wechsler Harwood Shareholder Relations Department: clowther@whesq.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.