WSJ Internet Edition: PRESSTEK and CABOT NEWSLETTER
enjoined in class action lawsuit.
Where there is smoke there is fire. Something smells in the Cabot
camp and its not looking good for the average shareholder.
Maybe its the way they do business in the Northeast. Tout a stock
all the while dumping it for your own profitability.
Presstek Shareholders Sue, Alleging Scheme to Boost Stock
By a WALL STREET JOURNAL Staff Reporter
CONCORD, N.H. -- Shareholders sued Presstek Inc. and the Cabot Market Letter, alleging a fraudulent scheme to boost the price of Presstek's stock.
In a separate suit, a Presstek shareholder sued the company claiming damages for an allegedly false financial report that inflated the company's earnings. Both suits were filed in U.S. District court here and sought class-action status.
Presstek, a printing company based in Hudson, N.H., denied wrongdoing. Carlton Lutts, editor of the Cabot Market Letter, which has recommended Presstek, declined comment.
In their suit, shareholders Tonia Alfonso and Dick Ruestman allege a scheme to "artificially inflate, maintain and otherwise manipulate" the stock via false statements, nondisclosed patent problems, and insider trading. Presstek Chairman Robert Howard and his son Lawrence, a director of the company, were also named as defendants, as was Mr. Lutts.
The Securities and Exchange Commission has been investigating Presstek for evidence of a possible manipulation. The shares recently fell from a high of $200 to Friday's close of $64.50 following disclosures about the SEC's probe. The stock dropped $1.50 a share in Nasdaq Stock Market trading Friday.
In the second suit, shareholder Bill Berke said that if Presstek had used generally accepted accounting in 1995, it would have reported net income of just $1.6 million, or 10 cents a share -- well below the $2.9 million, or 18 cents a share, it reported. The suit named seven Presstek executives and Presstek's accountants.
The complaint also said Presstek misrepresented the 1996 first quarter. In mid-June, Presstek restated earnings, citing auditors' revisions of tax treatment. As a result, net income was just $1.3 million, or eight cents a share, rather than $2.1 million, or 12 cents a share, as first reported. |
