KO&L LLP FILES CLASS ACTION LAWSUIT AGAINST COMVERSE TECHNOLOGY INC.
On June 12, 2006, KO&L filed a class action complaint against Comverse Technology Inc. ("Comverse") (NASDAQ: CMVT) and certain of its top officers in the U.S District Court for the Southern District of New York on behalf of investors who purchased the publicly traded securities of Comverse during the period April 30, 2001 and April 16, 2006, inclusive (the “Class Period”). Comverse is one of a number of companies that have been targeted by the SEC and the United States Attorney's Office for back-dating the exercise prices on stock options granted to officers of the company to dates on which the price of Comverse stock was significantly below the market price on the dates of the option grants. The Complaint alleges that defendants falsely stated during the Class Period that stock options were granted at exercise prices at or above the price on the date of the grants. Further, the Complaint alleges that Comverse's financial results were materially overstated because it did not report the difference as an expense in its financial statements.
On March 14, 2006, the Company issued a press release announcing that it had created a special committee to review matters relating to the Company’s stock option grants including, but not limited to, the accuracy of the stated dates of option grants and whether all proper corporate procedures were followed. Following this announcement, shares of Comverse common stock declined $4.30 per share, or 15%, to close at $24.85 per share, on unusually heavy trading volume. On April 17, 2006, before the markets opened for trading, the Company issued a press release announcing the results of the special committee’s review and revealed “that the actual dates of measurement for certain past stock option grants for accounting purposes differed from the recorded grant dates for such awards.” As a result, the Company will need to restate its historical financial statements for each of the fiscal years ended January 31, 2005, 2004, 2003, 2002 and 2001 and for the first three quarters of the fiscal year ended January 31, 2006 because “[a]ny such stock-based compensation charges would have the effect of decreasing the income from operations, net income and retained earnings figures contained in the Company’s historical financial statements.” This announcement further drove Comverse stock down to close at $22.94 on April 18 on exceptionally high volume.
