PHILADELPHIA, Feb. 15, 2001 (PRIMEZONE) --The law firm of Spector, Roseman & Kodroff, P.C. announces that a class action lawsuit has been commenced in the United States District Court for the Northern District of California against defendants Critical Path, Inc. ("Critical Path" or the "Company") (Nasdaq:CPTH), David Hayden, David Thatcher, Douglas Hickey and the Company's auditor, Price WaterhouseCoopers, on behalf of purchasers of the stock of Critical Path between June 15, 2000 and February 1, 2001 (the "Class Period").
The complaint alleges that Critical Path, certain of its officers and directors, and the Company's auditor, Price WaterhouseCoopers, violated the Securities Exchange Act of 1934. Critical Path touts itself as a leading provider of complete end-to-end Internet messaging and collaboration solutions for Internet service providers ("ISPs"), telecommunications providers, web hosting companies, web portals and corporations. The Company provides services and products, both on a hosted and licensed basis, that enables its customers to provide feature-rich e-mail, messaging, collaboration and directory services to their customers and employees. The complaint alleges that defendants disseminated false and misleading statements concerning the Company's business and revenues for 2000 and beyond. Specifically, the complaint alleges, amongst other things, that defendants concealed the fact the Company's future revenues would decline due to the fact that many of the Company's customers needed to cut capital expenditures and new accounting regulations would negate the Company's ability to continue to recognize up front license fees in Q4 2000. As a result of defendants' false and misleading statements, the price of Critical Path stock was artificially inflated throughout the Class Period during which defendants were able to unload over $21 million worth of common stock.
On January 18, 2001, after the market closed, Critical Path announced that the Company would report a loss in the fourth quarter 2000, as opposed to positive earnings which it had been touting for months, as well as a loss for the first quarter 2001, allegedly due to: higher costs from the Company's acquisition of PeerLogic, Inc.; dot-com customers going out of business; and an accounting change that required the Company to defer $7 million in licensing revenue. This was directly contrary to what Critical Path had been telling the investing public throughout the entire Class Period. Indeed, this disclosure shocked the market, causing Critical Path's stock to plummet $11 per share, or 55%, from $20 per share to close at $9 per share on January 18, 2001.
Then, on February 2, 2001, the Company disclosed the full extent of its fraud when it announced over the PRNewswire that its Board of Directors formed a special committee to conduct an investigation into the Company's revenue recognition practices. According to published reports and the Company's press release, the Company has discovered a number of transactions that put into question the Company's financial results. On January 18, 2001, the Company had announced fourth quarter results of $52 million in revenue and net loss, excluding special charges, of $11.5 million. This information had caused the stock to decline substantially. The Company disclosed that it now believes that these results were "materially misstated'" and it further cautioned that its investigation had just begun. The Company also announced that the Board of Directors placed on administrative leave David Thatcher, the Company's president, and William Rinehart, the vice president of worldwide sales.
If you purchased Critical Path securities between June 15, 2000 and February 1, 2001, you may, no later than April 3, 2001, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as ``lead plaintiff.'' Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel Robert M. Roseman toll-free at 888-844-5862 or via E-mail at classaction@spectorandroseman.com. For more detailed information about the firm please visit its website at http://www.spectorandroseman.com.
SPECTOR, ROSEMAN & KODROFF, P.C., located in Philadelphia, Pennsylvania and San Diego, California, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca