ATI illegally misled shareholders, lawsuit claims
Class action filed in US
ATI has been hit with a class action alleging that the 3D graphics company misled shareholders by providing a false picture of its current financial statement and its potential earnings.
The suit, filed in the US by two law firms - Bernard M Gross and New York-based Milberg Weiss Bershad Hynes & Lerach - on behalf of shareholders, claims that ATI CEO K Y Ho, former CFO James Chwartacky and director James Fleck all transgressed US securities law.
On the basis of the named directors' claims regarding the state of ATI's business, anyone who bought company stock between 13 January 2000 and 24 May 2000 paid too much for it, the suit alleges. On 24 May 2000, ATI's share price plummeted after the company issued a profits warning. That warning knocked CA$2.2 billion off ATI's market cap.
The directors' prognosis was "unrealistically positive", the suit claims. Essentially, it alleges the Ho and Co. talked up the company's financial position in order to maximise the share price.
"Statements were made that either failed to disclose material facts or misrepresented the state of the company's business," said Samuel Rudman, a lawyer at Milberg Weiss, according to Canadian paper the Globe and Mail.
The suit demands ATI pay up unspecified damages to shareholders.
ATI said it refuted the charges and would defend itself vigorously. ®
The Globe and Mail: Firms file suit against ATI