You are right. Weiss-Yourman goofed that detail. Hitsgalore did not disclose Reed's criminal conviction in the May 26 10k/a.
They disclosed it in a July 1 filing, after the hyped-up run-up in the stock price. Weiss-Yourman erred in the date, in the excerpt from their amended complaint that you cited:
defendants failed to disclose that Reed has been a defendant in two prior civil fraud actions, had been convicted of wire fraud, and had served ten months in a federal prison camp, until May 26, 1999 when Hitsgalore filed its amended 1998 10-K.
Another minor goof in the amended complaint is that they got the following mixed up:
Moreover, the stated $50 million appraisal of the Trust's collection of Aden stamps falls far short of the highest price ever paid for a collection of stamps. As of October 26, 1998, the highest price ever paid for a stamp collection is $9.8 million
I think that should have read "far exceeds the highest price ever paid."
I'm not going to be an apologist for the class action lawyers, but I am aware that the judge didn't give them much time to amend their complaint, and they did in fact do quite a lot of research in that brief period of time. And it was very good research, especially with regard to the value of the collateral for the LFT debt. |
