(from CBS MARKET WATCH)
Milberg Weiss Files Class Action Suit Against Legato Systems, Inc. and Its Officers and Directors Alleging Misrepresentations, False Financial Statements and Insider Trading
THURSDAY, JANUARY 20 2000 3:50 PM EST
SAN DIEGO, Jan 20, 2000 (BUSINESS WIRE) -- Milberg Weiss (http://www.milberg.com) today announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of Legato Systems, Inc. ("Legato") (Nasdaq:LGTO) common stock during the period between October 21, 1999 and January 19, 2000 (the "Class Period").
The complaint charges Legato Systems, Inc. and certain of its officers and directors with violations of the federal securities laws by making misrepresentations about Legato's business, earnings growth and financial statements and its ability to continue to achieve profitable growth. During the Class Period, the Individual Defendants (Louis C. Cole, Kent D. Smith, Stephen C. Wise and Nora M. Denzel), who controlled and were senior officers of Legato, engaged in the scheme to conceal Legato's badly flagging growth to prevent the decline in the price of Legato stock in order to: (i) use Legato's artificially inflated stock as currency to fund the Company's acquisition of companies in stock-for-stock transactions; and (ii) receive $11.5 million in insider trading proceeds.
As Legato continued to report "record" profits and defendants created the fiction that they were achieving 150% growth in net income, the price of Legato stock reacted, rising to a Class Period high of $79-1/4 on December 23, 1999. Defendants sought to profit from Legato's fictional record profits and purported growth and sold over 178,000 shares in just six days for total proceeds of $11.5 million. In order to inflate the price of Legato's stock, defendants caused the Company to falsely report its results for the third quarter of 1999 and continued to attempt to improperly recognize revenue throughout the Class Period.
On January 19, 2000, Legato dropped an atomic bomb on investors, revealing that it would restate its third quarter earnings and that it would fall desperately short of meeting its forecasted earnings for the fourth quarter 1999. This revelation caused Legato stock to be halted on NASDAQ and ultimately to plummet to $29 per share in after-hours trading, a decline of 63% from its Class Period high.
Plaintiff seeks to recover damages on behalf of all purchasers of Legato common stock during the Class Period (the "Class"). The plaintiff is represented by several law firms, including Milberg Weiss Bershad Hynes & Lerach LLP, who have expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Milberg Weiss has been actively engaged in commercial litigation, emphasizing securities and antitrust class actions, for more than 30 years. The firm has offices in New York, San Diego, San Francisco, Los Angeles and Boca Raton and 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 to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous important actions on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total approximately $2 billion.
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at wsl@mwbhl.com.
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CONTACT: Milberg Weiss Bershad Hynes & Lerach, LLP
William Lerach, 800/449-4900
wsl@mwbhl.com
TICKERS: NASDAQ:LGTO
WEB PAGE: businesswire.com
GEOGRAPHY: CALIFORNIA
INDUSTRY CODE: LEGAL/LAW
CLASS
ACTION
LAWSUIT
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