LOS ANGELES, Feb. 6, 2002 (PRIMEZONE) -- An investor has sued Homestore.com, Inc. (Nasdaq:HOMS), claiming the company misled the public about its financial results, Berman DeValerio Pease Tabacco Burt & Pucillo said today.
The lawsuit, filed February 5, 2002 in the U.S. District Court for the Central District of California, seeks damages for violations of federal securities laws on behalf of all investors who bought Homestore stock from May 4, 2000 through December 21, 2001 (the Class Period).
Berman DeValerio has represented investors in class actions for 20 years. To review the complaint and learn more about becoming a lead plaintiff, visit the firm's Website at www.bermanesq.com.
The complaint accuses Homestore, an online provider of home and real estate information, products and services, of improperly recording revenue and artificially inflating its financial results.
According to the complaint, Homestore reported record earnings growth during the Class Period due largely to strong sales of advertising on its websites. But the complaint says the company and three individual defendants relied on accounting tricks to beef up its revenue, not bona fide sales. Rather than receiving cash for ad space, Homestore would buy a product or service from companies that placed ads on its website, the complaint says. Such barter transactions should not have been entered as direct revenue under Generally Accepted Accounting Principles, the lawsuit claims.
The first whiff of trouble came on December 21, 2001, when the company admitted that an independent investigator was examining its accounting practices and that a restatement of earnings was forthcoming. Less than two weeks later, the complaint said, the company announced the preliminary results of the inquiry: Homestore had overstated online advertising revenues by between $54 million and $95 million over the first three quarters of 2001.
After the December 21 announcement, Nasdaq halted trading of Homestore stock at $3.60. When trading resumed on January 7, Homestore stock fell to a low of $1.24 before closing at $2.46, down 32% from its last close and far below the Class Period high of $54.62. Not everyone saw his paper earnings evaporate, though. According to the complaint, the individual defendants named in the suit reaped nearly $34 million from insider sales before the truth emerged.
If you purchased Homestore common stock during the period May 4, 2000 through December 21, 2001, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests:
Patrick T. Egan, Esq. Jennifer Abrams, Esq.
One Liberty Square 425 California Street, Suite 2025
Boston, MA 02109 San Francisco, CA 94104
(800) 516-9926 (415) 433-3200
law@bermanesq.com
You may also visit the firm's website at www.bermanesq.com
If you wish to apply to be lead plaintiff in this action, a motion must be filed on your behalf with the court no later than February 25, 2002. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action. To be a member of the class, however, you need not take any action at this time, and you may retain counsel of your own choice. If you decide to seek appointment as lead plaintiff, you may also retain counsel of your choice.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations and consumer fraud. The firm consists of 31 attorneys in Boston, San Francisco and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca