NEW YORK, May 15, 2006 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) ("Pomerantz") has filed a class action lawsuit in the United States District Court for the Eastern District of Pennsylvania, against GMH Communities Trust ("GMH" or the "Company") (NYSE:GCT) and certain of its officers, on behalf of purchasers of the common stock of the Company during the period from October 28, 2004 - March 10, 2006, inclusive (the "Class Period"). The complaint alleges violations of Sections 11 and 15 of the Securities Act, Section 10(b) and Section 20(a) of the Exchange Act and SEC Rule 10b-5.
GMH Communities Trust is a Maryland corporation that maintains its principal executive office in Newtown Square, Pennsylvania. GMH provides housing to college and university students residing off-campus and to members of the U.S. military and their families. The Complaint alleges that during the Class Period, the defendants embarked on a scheme to inflate the earnings of GMH and to issue dividends in violation of its loan covenants, in order to inflate the price of GMH common stock. The inflated stock price allowed GMH to sell a secondary offering in October 2005 on more favorable terms than would otherwise have pertained. The defendants were able to accomplish their scheme by issuing a series of false and misleading financial results to the market. The defendants portrayed GMH as a growing real estate investment trust ("REIT") in a particular niche market -- student and military housing -- that payed high dividends.
The Complaint further alleges that on March 13, 2006, GMH announced that it was postponing the release of its results for the fourth quarter and year ended December 31, 2005. The delay was related to events arising from an investigation initiated by GMH's Audit Committee. The Audit Committee's investigation revealed evidence indicating, among other things, material weaknesses in GMH's internal controls, pressure by key executives on the accounting function, and the need for adjustments to GMH's financial statements in current and prior accounting periods. GMH also admitted that it had violated the loan covenants in its credit facility by issuing yearly dividends for 2005 in the amount of $0.91 per shares.
In response to these revelations, on March 10, 2006, the price of GMH common stock fell $3.93 per share from the previous day's closing price, losing over 23% of its value in one day on extremely high volume, to close at $12.90 per share. The company's share price continued its descent until it closed below $11 per share on March 21, 2006. On March 31, 2006, GMH reported additional delays in the filing of its annual report and anticipated restatements of previously reported results due to improper capitalization of expenses and the timing of recognition of revenues and expenses.
If you purchased the securities of GMH during the Class Period, you have until June 2, 2006 to ask the Court to appoint you as lead plaintiff for the Class. Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Teresa L. Webb (tlwebb@pomlaw.com) or Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. For more information about the Firm, visit our web site at www.pomlaw.com.
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