Shareholders Take Action Against Lehman Brothers
With the current US financial crisis, and pending government bailout, you may be wondering if anyone is legally pursuing any of the financial institutions that have gone under. Well on September 24, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit on behalf of the investors who purchased the Preferred Series “J” stock of Lehman Brothers.
The Complaint asserts that Lehman’s Prospectus contained both material misstatements and omissions, which Plaintiff and the Class relied upon to their detriment. The representations made in the Company’s Prospectus were materially false and misleading because at the time of the Offering, Lehman was already suffering from several adverse factors that were not revealed and/or adequately addressed in the document; including the failure to set aside adequate allowances to cover the Company’s ever increasing portfolio of underperforming sup-prime related products and to adequately write-down commercial and residential mortgage and real estate assets. These factors were already causing a material adverse affect on Lehman’s business and directly led to Lehman’s September 15, 2008 announcement that it was seeking protection under the Federal Bankruptcy Code in the largest bankruptcy filing in U.S. history.
The Complaint alleges that Defendants could have – and should have – discovered the material misstatements and omissions in the Company’s Prospectus prior to its filing with the SEC and distribution to the investing public. Instead, they failed to do so as a result of a negligent and grossly inadequate due diligence investigation.
It’s the complaint’s perspective that as a result of the dissemination of the false and misleading statements set forth in the complaint, the market price of Lehman Preferred J was artificially inflated during the Class Period. In ignorance of the false and misleading nature of the statements described in the complaint, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of Lehman Preferred J. Had plaintiff and the other members of the Class known the truth, they would not have purchased said securities, or would not have purchased them at the inflated prices that were paid.
We all knew it was simply a matter of time until the shareholder lawsuits began, it is simply a question of whether there are true assets remaining to be taken. This event reminds me why it is vital to have 100% accurate phraseology and financial reporting data in all of your public filings. To see how we at Vintage Filings can assist you today, click here.
