Re: [CANSLIM] Law Suits (was ACRT or MXT?)

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Law Suits (was ACRT or MXT?)
Date: Mon, 27 May 2002 20:57:06 -0400

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the lawsuit alleges that they inflated revenues and earnings related to the
loans to private individuals over the two year period of the class action.
Any reserves for settlement or legal expenses would be current expenses, and
are not involved in  any restatement of past financials.

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Monday, May 27, 2002 8:48 PM
Subject: Re: [CANSLIM] Law Suits (was ACRT or MXT?)

Katherine:

     I can understand why earnings will need to be restated (because of the
expenses or the need to put some expenses in a reserve-fund), but why would
sales need to be restated (ie. the new expenses involved in the lawsuit
might
indeed affect the bottom line, but how would it affect how much was sold in
the past [unless the lawsuit alleges the accounting firm was dishonest in
displaying the sales revenue]).  Moreover, if the company restates its sales
after the allegation and before the conviction, wouldn't that company just
be
admitting what was charged?

     Can you envision a situation where sales would have to be restated
other
than when the company's accounting firm portrayed sales more than it
actually
was?

jans

In a message dated 5/27/2002 7:05:14 PM Eastern Daylight Time,
stkguru@bellsouth.net writes:

<< A class action lawsuit can drag on for years. At the least, it may cause
a
 company to reserve funds for a settlement and legal expenses that could be
 better used to build the company. If the same officers are still in place,
 it can cause a loss of confidence in their present day business dealings.
 But in any case, it puts a negative on the stock. It may be able to
overcome
 the negative and go up in price, but is still affected.

 If insiders were selling during the class action period, and undoubtedly
 some did, there may be another lawsuit alleging insider trading.

 Prior year earnings and sales figures may end up having to be restated, >>

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