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Monday June 11, 11:01 pm Eastern Time
Press Release
Lovell & Stewart and Sirota & Sirota Announce Securities Fraud Class Action Lawsuit Against Corvis Corp., Officers and Directors, Investment Banks
NEW YORK--(BUSINESS WIRE)--June 11, 2001--The law firms of Lovell & Stewart, LLP ((212) 608-1900 or www.lovellstewart.com) and Sirota & Sirota, LLP ((212) 425-9055 or www.sirotalaw.com) filed a class action lawsuit on June 11, 2001 on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of Corvis Corp. (NasdaqNM:CORV) between July 27, 2000 and June 8, 2001 inclusive.
The lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to recover damages. Any member of the class may move the Court to be named lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than July 9, 2001.
The action, Chocron v. Corvis Corp., et al., which is pending in the U.S. District Court for the Southern District of New York (500 Pearl Street, New York, New York), Docket No. 01-CV-5224, alleges that Corvis Corp. and certain of its current and former officers and directors violated the federal securities laws by issuing and selling Corvis common stock pursuant to the initial public offering without disclosing to investors that at least two of the lead underwriters and two of the other underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors.
In exchange for the excessive commissions, the complaint alleges, lead underwriters Credit Suisse First Boston Corp. and FleetBoston Robertson Stephens, Inc. and underwriters Lehman Brothers, Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc. allocated Corvis shares to customers at the IPO price of $36.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $36.00, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Corvis stock rocketed upward (a practice known on Wall Street as ``laddering'') was intended to (and did) drive Corvis's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the underwriters and their customers to reap enormous profits by buying Corvis stock at the $36.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $102.00 during its first day of trading.
Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to ``kick back'' some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation.
According to the complaint, Corvis's share price remained at an artificially inflated level in part due to the fact that Paul Johnson, an analyst employed by defendant and co-lead underwriter FleetBoston Robertson Stephens, maintained his bullish ``buy'' rating on Corvis stock even as Robertson Stephens insiders including its President, Robert Emery, and Johnson himself, dumped their own Corvis stock. This self-serving and unwarranted promotion of Corvis stock by way of misleading analyst recommendations permitted the underwriter defendants and their officers, directors and employees to sell shares of Corvis stock to unsuspecting class members at artificially high prices.
The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Corvis offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and ``laddering'' scheme discussed above.
Christopher Lovell, the senior partner at Lovell & Stewart, has been appointed lead counsel or co-lead counsel in numerous significant class actions, including actions involving reportedly the largest class action recoveries in history under three separate federal statutes (the Sherman Antitrust Act, the Commodity Exchange Act, and the Investment Company Act of 1940). These record-breaking recoveries for class plaintiffs included the $1.027 billion recovery in In re: NASDAQ Market-Makers Antitrust Litigation and a $145.35 million recovery in 1999 in In re: Sumitomo Copper Litigation, a class action against various parties who conspired to manipulate the worldwide copper and copper futures markets for their own profit.
Howard Sirota and the Sirota & Sirota firm have taken leadership roles in numerous high-profile and legally significant cases, including serving as Chairman of the Executive Committee of plaintiffs' attorneys in the landmark In re: Crazy Eddie Securities Litigation case ($93 million recovery for class, with additional payments from defendants expected in the future) and serving as a member of the Executive Committee in In re: Structural Dynamics Research Corporation ($37.5 million recovery).
Investors who acquired Corvis common stock during the period July 27, 2000 through June 8, 2001 inclusive may contact Lovell & Stewart or Sirota & Sirota at the telephone numbers, addresses or E-mail addresses below for more information regarding the class action lawsuit. Investors can also visit Lovell & Stewart's website at www.lovellstewart.com or Sirota & Sirota's website at www.sirotalaw.com to view a copy of the complaint.
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Contact:
Lovell & Stewart, LLP, New York
Christopher Lovell
Victor E. Stewart
Christopher J. Gray
212/608-1900
sklovell@aol.com
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