Securities fraud class action filed by BLB&G client Lead Plaintiff
Otter Creek Partners on behalf of all persons and entities who acquired
the common stock of Clarent Corporation ("Clarent"), between April 26, 2000
and August 31, 2001, inclusive (the "Class Period").
BLB&G OBTAINS LIABILITY VERDICT IN CLARENT SECURITIES FRAUD TRIAL
February 17, 2005 – BLB&G obtained only the second securities fraud class
action verdict in favor of investors since the 1995 passage of the PSLRA.
After 4 weeks of trial and 3 days of deliberation, a San Francisco jury found
liability against defendant Jerry Chang, CEO of Clarent,
for a knowing omission or misstatement in Clarent's second quarter 2001 10-Q.
The jury also found that Clarent's former auditor Ernst & Young ("E&Y") made a
false statement in connection with Clarent's second quarter 2001 10Q, although
it declined to assign liability to E&Y for the misstatement.
In this action, Plaintiffs sought to demonstrate that both Chang,
the founder and CEO of Clarent, and Clarent’s auditor E&Y - defrauded shareholders
by materially overstating Clarent’s revenues for fiscal year 2000 and the first two
quarters of fiscal year 2001. The Plaintiffs alleged that Chang knowingly
falsified the company’s financial statements during this period and that E&Y,
in its auditing capacity, knowingly signed off on these fraudulent financial reports.
BLB&G Partner Blair
Nicholas commented:
"Our clients, and the investment community in general,
are committed to holding all wrongdoers accountable. Even though the jury found otherwise,
auditing firms should know that they are living in a new world where “pennies-on-the-dollar”
settlements will not be acceptable to our clients no matter what the risk of loss at trial."
BLB&G began prosecuting
this securities fraud class action in the United States District Court for the Northern
District of California in the summer of 2002.
CLARENT, CHANG AND "ISDs" AGREE TO $6.9 MILLION SETTLEMENT
A settlement of $6.9 million was reached with Clarent, Jerry Chang and certain of Clarent's officers,
collectively the “Individual Settling Defendants” or “ISDs,” in this action,
which the Court approved on July 14, 2005.
For further information, you can contact Claims Administrator The Garden City Group,
Inc. at 800-326-4150. The Notice of Settlement and Proof of Claim
forms are available below. IN ORDER TO BE ELIGIBLE TO SHARE IN THE BENEFITS OF THE SETTLEMENT,
CLASS MEMBERS MUST HAVE PREVIOUSLY SUBMITTED A COMPLETED AND SIGNED PROOF OF
CLAIM FORM.
Notice of Pendency and Proposed
Settlement of Class Action
Proof of Claim
COOLEY DEFENDANTS AGREE TO $2 MILLION SETTLEMENT
A settlement of $2 million was reached with the
"Cooley Defendants" in this action, which the Court approved on March 25, 2005.
For further information, you can contact Claims Administrator The Garden City Group,
Inc. at 800-326-4150. The Notice of Settlement, Notice of Class Action and Proof of Claim
forms are available below. IN ORDER TO BE ELIGIBLE TO SHARE IN THE BENEFITS OF THE SETTLEMENT,
CLASS MEMBERS MUST HAVE PREVIOUSLY SUBMITTED A COMPLETED AND SIGNED PROOF OF CLAIM FORM.
Notice of Pendency and Proposed
Settlement of Class Action
Notice of Class Action
Proof of Claim
BACKGROUND
Clarent's stock ceased trading on September 4, 2001 as a result of the Company's
disclosure that the revenues reported in its financial statements for the first two
quarters of 2001 may have been overstated. On October 23, 2001, Clarent announced that
its investigation indicated that there have been financial irregularities that materially
affect the previously reported results for fiscal year 2000 as well as the first two quarters
of fiscal 2001. On May 8, 2002, Clarent restated its revenues and earnings for those six quarters
and as a result, its stock price plummeted, leaving shareholders suffering massive losses.
On September 9, 2002, in what was a significant decision for the future of securities cases,
Judge Breyer of the District Court granted plaintiffs' motion to lift the PSLRA discovery stay
and ordered discovery to begin. This is noteworthy because typically, since the passage of the
PSLRA in 1995, plaintiffs in securities actions have rarely been able to obtain discovery from
defendants in the early stages of a case. The PSLRA dictates that discovery cannot begin until
all motions to dismiss the complaint have been ruled upon. In another victory for plaintiffs in
this case, on December 9, 2003, Judge Breyer denied defendants' motions to dismiss.
Along with Mr. Nicholas,
Senior Counsel
Niki Mendoza and
associate
Brett Middleton are responsible for prosecuting this action.
