BearingPoint Restates Earnings, Faces Legal Action
At least six lawsuits have been filed against BearingPoint, the former consulting arm of Big Four firm KPMG, after the firm recently restated earnings.
BearingPoint lowered its earnings by $10.8 million for the first three quarters of fiscal year 2003 in a Form 8-K filed with the Securities and Exchange Commission last month. In the report, filed August 14, the consulting company stated that it undervalued intangible assets and reduced income to account for additional amortization expense and related accounting adjustments.
The various lawsuits are class action suits that claim that BearingPoint intentionally misrepresented revenues and misled shareholders with their earlier filing. The price of a share of BearingPoint stock dropped 23%, from $10.31 on August 13 to $7.90 on August 14 after the release of the report.
Anyone who owned BearingPoint stock between October 30, 2002 and August 13, 2003 and who sustained damages, is entitled to be included in the lawsuits. Analysts anticipate that several thousand plaintiffs may participate in the legal action. A lead plaintiff and lead counsel have yet to be named.
The lawsuits allege that BearingPoint violated Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by issuing statements to the market containing material misrepresentations.
BearingPoint spokeseman John LaPlace said, "We believe the suits have no merit and will vigorously defend against them."
Philadelphia-based Berger & Montague, P.C., Bala Cynwyd, PA-based Schiffrin & Barroway, LLP, Baltimore-based Charles J. Piven, P.A., and Philadelphia-based Brian M. Felgoise, P.C. are among the firms bringing legal action. BearingPoint shareholders wishing to participate in a lawsuit should contact one of these firms.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.