Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Securities Fraud Lawsuit Filed Against Delphi Corp.
NEW YORK -- A securities fraud lawsuit against Delphi Corp. and certain of its officers and directors, on behalf of all persons, including preferred shareholders, who purchased Delphi securities on the open market from April 12, 2000, through March 3, 2005. The action was filed yesterday in the U.S. District Court for the Southern District of New York by the law firm of Wolf Popper LLP. The complaint alleges that during the class period, defendants caused Delphi to issue materially false and misleading press releases and Securities and Exchange Commission filings touting Delphi's financial performance. Defendants failed to disclose in those public statements that Delphi, through a variety of intentional accounting manipulations, had, among other things, overstated cash flow from operations in 2000 by approximately $200 million, overstated pre-tax income in 2001 and prior periods in excess of $100 million, prematurely recognized revenue for technology contracts and rebates that should have been spread over the life of the contract and improperly capitalized expenses that should have been recognized immediately and boosted cash flow from operations and pretax earnings by claiming it sold assets and inventory that it had agreed to buy back later.Defendants' improper actions were revealed on March 4 when Delphi announced the resignation of Alan Dawes, Delphi's chief financial officer, after the Audit Committee "expressed a loss of confidence in him" and reported that, as a result of the extensive accounting improprieties, Delphi's previously announced financial results would be restated and its Form 10-Q for the period ended Sept. 30, 2004, and audited financial results for year ended 2004 would be delayed pending the completion of an internal investigation.In response to the March 4 disclosures, Delphi common stock plummeted to $5.46 per share on extremely heavy volume of 24.5 million shares, as compared to a closing price of $6.37 per share on volume of 2.6 million shares the prior day. On March 8, Moody's slashed Delphi's credit rating to junk status.Class members who desire to be appointed a lead plaintiff in this action must file a motion with the court no later than May 6. Class members who are interested in serving as a lead plaintiff in this action, or other persons who have questions or information regarding the prosecution of this action, may call Wolf Popper at (877) 370-7703.Visit Wolf Popper LLP: www.wolfpopper.com"