>>With every new lawyer trying to create business sending another PR newswire notification of a class action (all for the same lame reason: some not-so-bright investors bought at the very peak of a speculative run up in which a group of shorters where badly punished)
Nice try but no cigar. The class action lawsuits stem from the management of KTEL witholding material information from investors about the impending delistment proceedings brought by Nasdaq. The company is required to disclose this information in a timely manner, instead the company continued hyping the stock. Whether or not investors were bright for buying KTEL during the run-up is irrelevant to the question of whether KTEL officials violated SEC rules.
Pomerantz Haudek:
As defendants have now admitted, at least three weeks before November 17, 1998, K-tel received a warning letter from Nasdaq that its common stock faced delisting from the National Market because it failed to meet NASDAQ's $4 million minimum asset requirement for continued listing. Despite the warning letter, K-tel, for the next three weeks, concealed this information and painted a misleadingly positive picture about K-tel, alleges the complaint. For example, on November 3, 1998 and on November 10, 1998, defendants publicly touted two partnerships with household corporate names such as Playboy and Microsoft relating to the Company's new venture as an Internet music retailer but
did not say a word about the possibility of delisting. These unqualified positive announcements resulted in skyrocketing prices for K-tel's stock.
Kaplan, Kilsheimer & Fox LLP:
The Complaint alleges that K-Tel and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Complaint alleges, among other things, that
defendants artificially inflated the price of K-Tel common stock by issuing a series of false and misleading statements and press releases to conceal that K-Tel had been warned that it was to be delisted
from the Nasdaq National Market. When news of the Nasdaq warning was made public on November 17, 1998, the price per share of K-Tel common stock dropped from $17-5/8 per share to less
than $10 in just two trading days. |
