The complaint charges GenesisIntermedia, Ramy El-Batrawi (the company's former CEO), Ultimate Holdings Ltd. (a Bermuda investment company owned by Adnan Khashoggi that was the company's largest shareholder and its alleged accomplice) and others with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, arising - as detailed below - from an elaborate two-year scheme to manipulate the market in the company's stock. The complaint alleges that, during the class period, GenesisIntermedia's stock price was artificially inflated by the defendants, who directly (through complex insider trading) and indirectly (through the dissemination of materially false and misleading information about the company) manipulated the market for GenesisIntermedia common stock. The lawsuit will seek to recover losses suffered by investors who purchased GenesisIntermedia stock during the class period, excluding the defendants and their affiliates.
The complaint alleges that scheme began in December 1999 when Khashoggi and El-Batrawi made a secret stock payment worth $3 million to financial commentator Courtney Smith to tout the company's stock. Smith recommended the stock at least 18 times during appearances on CNBC, CNN, Bloomberg Television and other media outlets. By the time of Smith's last appearance in March 2001, the stock had jumped from less than $1.50 per share in December 1999 to highs of between $14 and $28 per share. The stocked jumped again in May 2001, soaring 42% in a single week after a buy recommendation by Rafi Khan, an ex-stockbroker banned from the securities industry who had spent several days meeting GenesisIntermedia executives at their offices. According to the complaint, the defendants accentuated the stock run-up with their own false statements and insider trading. By late summer, the stock was selling at more than $17 per share and Ultimate Holdings, Khashoggi's company, had reaped some $7 million in illegal insider trading "short-swing" profits. Moreover, as the complaint alleges, during the late summer defendants directly intervened in the market at critical times in order to support the company's stock price (at times accounting for nearly 90% of the shares traded). The final chapter in the alleged fraud began in September 2001 when, in order to facilitate short-selling, 7.2 million shares of GenesisIntermedia stock were loaned to Native Nations Securities, Inc., a small firm in New Jersey. The only entity holding enough shares to make the loan was Khashoggi's Ultimate Holdings. Native Nations, in turn, loaned the 7.2 million shares to MJK Clearing, Inc., which then re-loaned the shares to at least four other securities firms. When GenesisIntermedia's share price later fell and the other firms asked for repayment, Native Nations revealed that someone had altered its books and had walked away with $60 million. The Securities Investor Protection Corporation seized MJK Clearing for insufficient capital - producing the largest failure of a U.S. brokerage firm in at least 30 years.
The Nasdaq Stock Market halted trading in GenesisIntermedia stock on September 25, 2001, but not before El-Batrawi had sold $1.7 million worth of his stock. The Securities and Exchange Commission has since announced a formal investigation.
Kirby McInerney & Squire, LLP Announces Class Action Lawsuit Against GenesisIntermedia, Inc.
NEW YORK, NY -- (INTERNET WIRE) -- 11/26/01 -- Please take notice that Kirby McInerney & Squire ( www.kmslaw.com ) has been retained by an institutional investor with millions of dollars in losses from investments in GenesisIntermedia, Inc. to commence a class action suit on behalf of investors who purchased the common stock of GenesisIntermedia, Inc. (``GenesisIntermedia'' or the ``Company'') (NASDAQ: GENI) between December 21, 1999 and September 25, 2001 (the ``Class Period').
The complaint charges GenesisIntermedia, Ramy El-Batrawi (the company's former CEO), Ultimate Holdings Ltd. (a Bermuda investment company owned by Adnan Khashoggi that was the company's largest shareholder and its alleged accomplice) and others with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, arising - as detailed below - from an elaborate two-year scheme to manipulate the market in the company's stock. The complaint alleges that, during the class period, GenesisIntermedia's stock price was artificially inflated by the defendants, who directly (through complex insider trading) and indirectly (through the dissemination of materially false and misleading information about the company) manipulated the market for GenesisIntermedia common stock. The lawsuit will seek to recover losses suffered by investors who purchased GenesisIntermedia stock during the class period, excluding the defendants and their affiliates.
The complaint alleges that scheme began in December 1999 when Khashoggi and El-Batrawi made a secret stock payment worth $3 million to financial commentator Courtney Smith to tout the company's stock. Smith recommended the stock at least 18 times during appearances on CNBC, CNN, Bloomberg Television and other media outlets. By the time of Smith's last appearance in March 2001, the stock had jumped from less than $1.50 per share in December 1999 to highs of between $14 and $28 per share. The stocked jumped again in May 2001, soaring 42% in a single week after a buy recommendation by Rafi Khan, an ex-stockbroker banned from the securities industry who had spent several days meeting GenesisIntermedia executives at their offices. According to the complaint, the defendants accentuated the stock run-up with their own false statements and insider trading. By late summer, the stock was selling at more than $17 per share and Ultimate Holdings, Khashoggi's company, had reaped some $7 million in illegal insider trading "short-swing" profits. Moreover, as the complaint alleges, during the late summer defendants directly intervened in the market at critical times in order to support the company's stock price (at times accounting for nearly 90% of the shares traded). The final chapter in the alleged fraud began in September 2001 when, in order to facilitate short-selling, 7.2 million shares of GenesisIntermedia stock were loaned to Native Nations Securities, Inc., a small firm in New Jersey. The only entity holding enough shares to make the loan was Khashoggi's Ultimate Holdings. Native Nations, in turn, loaned the 7.2 million shares to MJK Clearing, Inc., which then re-loaned the shares to at least four other securities firms. When GenesisIntermedia's share price later fell and the other firms asked for repayment, Native Nations revealed that someone had altered its books and had walked away with $60 million. The Securities Investor Protection Corporation seized MJK Clearing for insufficient capital - producing the largest failure of a U.S. brokerage firm in at least 30 years.
The Nasdaq Stock Market halted trading in GenesisIntermedia stock on September 25, 2001, but not before El-Batrawi had sold $1.7 million worth of his stock. The Securities and Exchange Commission has since announced a formal investigation.
Kirby McInerney & Squire, LLP specializes in complex litigation, including securities class actions, and has repeatedly demonstrated its expertise in this field. Kirby McInerney & Squire has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and its achievements and quality of service have been chronicled in published decisions. More information about the firm and its accomplishments can be viewed at www.kmslaw.com.
Investors who purchased during GenesisIntermdia stock during the Class Period may, no later than December 17, 2001, move the Court to serve as lead plaintiff of the proposed class, if they so choose. In order to serve as lead plaintiff, however, an investor must meet certain legal requirements, as set out in the Private Securities Litigation Reform Act of 1995. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Class members need not, however, seek appointment as lead plaintiff in order to share in any recovery resulting from this litigation.
If you wish to discuss the claims described above, or have any questions concerning this notice or your rights, please contact:
Ira Press, Esq. Orie Braun KIRBY McINERNEY & SQUIRE, LLP 830 Third Avenue, 10th Floor New York, New York 10022 Telephone: (212) 317-2300 or Toll Free (888) 529-4787 E-Mail: obraun@kmslaw.com
Contact: Ira Press, Esq., KIRBY McINERNEY & SQUIRE, LLP Phone: 212-317-2300
Contact: Orie Braun, KIRBY McINERNEY & SQUIRE, LLP Phone: 212-317-2300 Email: obraun@kmslaw.com
Provider ID: 13035107 -0- Nov/27/2001 1:00 GMT |
