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Microcap & Penny Stocks : TGL WHAAAAAAAT! Alerts, thoughts, discussion. -- Ignore unavailable to you. Want to Upgrade?

To: Rocket Red who wrote (119482)	9/15/2003 4:04:06 PM
From: tool dude	Respond to of 150070

T guys qcharts is all but usless on bb's

To: Rocket Red who wrote (119482)	9/15/2003 4:05:15 PM
From: Rocket Red	Respond to of 150070

NEW YORK -- Dhruv Khanna, a founder and former general counsel of Covad Communications Inc. (COVD) who was dismissed from the company last year, has filed a lawsuit seeking class-action status against the company and its executives, accusing them of self-dealing at the expense of shareholders. The lawsuit, filed in the Delaware Court of Chancery, alleges Covad's board of directors "employed a pattern of self-dealing to enrich its members at a cost to shareholders of at least $125 million." The defendants are Covad, twelve directors and Crosspoint Venture Partners LP. "The Board has used millions of dollars in corporate funds and millions of Covad shares to enrich individual directors in transactions that were highly detrimental to Covad," the suit charges. "The Board has also engaged in other conduct through which it has looted and wasted corporate assets, including granting lavish executive contracts and condoning or participating in executive junkets." The Santa Clara, Calif., company filed for bankruptcy protection in 2001 and emerged later that year. The firm competes with the former Baby Bells, the dominant local-phone carriers, to provide digital-subscriber-line high-speed Internet access. Covad said in a statement that it hasn't been served with a complaint and that Mr. Khanna's allegations are similar to those disclosed in the company's 2002 annual report and quarterly filings this year. "We continue to believe the contentions of Mr. Khanna are without merit, and we will vigorously defend ourselves if brought in court," the firm said. Covad's board appointed a special committee last year, assisted by an independent law firm, to investigate the allegations, but the committee concluded they were without merit. In the complaint, Mr. Khanna claims his requests for company records related to the investigation were denied and that the committee "did nothing to actually investigate." He also sent a letter to Covad's board, alleging breaches of fiduciary duty, in June 2002. Mr. Khanna was placed on paid leave in June 2002 after an internal investigation cleared him of a sexual-discrimination or harassment charge, the complaint said. He was fired in January 2003. He seeks class-action status on behalf of all Covad shareholders, excluding the defendants, as of May 27, 2002, and June 16, 2003. Two of the 12 "defendant directors" listed in the lawsuit resigned in 2002, and two resigned in 2000. Defendants include Chairman Charles McMinn, Chief Executive Charles Hoffman and former CEO Robert Knowling. The complaint alleges Covad made investments in three companies -- Certive Inc., Bluestar Communications Group Inc. and DishnetDSL -- primarily to benefit certain directors and other "entities" they controlled. In June 2000, Covad entered into a merger deal with Bluestar, which was 46%- owned by defendant Robert Shapero, then a Covad director. Mr. McMinn and defendant Robert Hawk, still a Covad director, were also Bluestar shareholders. The complaint alleges almost all Covad executives objected to the merger. In 1999, Covad made a $5 million investment in Certive, which Mr. McMinn founded that year. He left Covad in 1999 and was Certive's CEO until October 2000. He was appointed Covad's chairman in November 2000. Mr. Khanna alleges Mr. McMinn founded Certive while still chairman of Covad. The lawsuit alleges Mr. McMinn "failed to timely offer the business opportunity to Covad at a fair valuation and thereby reaped the financial and other benefits of the investment." As of the end of last year, Covad had written down 80% of the original investment in Certive. Messrs. Shapero and Hawk are partners of Crosspoint, which invested in Covad, Certive and Bluestar. The complaint charges, "The Certive and BlueStar transactions came about to save Crosspoint, a Shapero/Hawk entity, from its own disastrous investments." The complaint also alleges conflicts of interest involving Covad's $23 million investment in Dishnet, made in 2001, and subsequent legal disputes. The suit contends Mr. McMinn has been on Dishnet's board and has had options to buy Dishnet shares for "well over a year." -Christine Nuzum; Dow Jones Newswires; 201-938-5172 Dow Jones Newswires 09-15-03 1553ET Copyright (C) 2003 Dow Jones & Company, Inc. All Rights Reserved. © Copyright Dow Jones