Milberg Weiss Files Class Action Suit Against Homestore.com, Inc.
January 4, 2002
SAN DIEGO, CA -- Milberg Weiss has announced that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of Homestore.com, Inc. ("Homestore") (Nasdaq: HOMS) common stock during the period between July 20, 2000 and December 21, 2001 (the "Class Period").
The complaint charges Homestore and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Homestore provides an online marketplace for home and real estate-related information, products and services. On July 19, 2000 (after the close of the market), Homestore issued a release of its positive 2Q 00 results, causing Homestore's stock price to soar by more than $7 (or 25%) the following trading day. The complaint alleges that as part of their effort to boost the price of Homestore stock, defendants misrepresented Homestore's true prospects in an effort to conceal Homestore's improper acts until they were able to sell at least $16 million of their own Homestore stock. In order to overstate revenues and assets in 2Q 00, 3Q 00, 4Q 00, 1Q 01, 2Q 01 and 3Q 01, Homestore violated Generally Accepted Accounting Principles and SEC rules by engaging in improper "roundtrip" transactions. These transactions had the effect of dramatically overstating revenues and assets. This came to an end (though unbeknownst to the public) in the Company's 3Q 01 as the Company's main roundtrip partner stopped doing these transactions with the Company.
Following the release of the Company's 3Q 01 results, the Company also slashed its revenue projections for 2002 from $563 million to $375-$425 million as a result of a material decline in its business with its main "roundtrip" partner. On this news the Company's shares plummeted by more than 50% the following trading day. Then, on December 21, 2001 (after the close of the market), the Company partially admitted that its past accounting for its prior results was inaccurate. On this news the Company's shares were halted and have not traded since. Then, on January 2, 2002, defendants admitted that the Company's revenue for 2001 had been overstated by as much as $95 million. The defendants also admitted that additional material restatements" may follow.
Plaintiff seeks to recover damages on behalf of all purchasers of Homestore common stock during the Class Period (the "Class"). The plaintiff is represented by Milberg Weiss Bershad Hynes & Lerach LLP, who has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from December 27, 2001. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, contact plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at firstname.lastname@example.org. If you are a member of this class, you can join this class action online at http://www.milberg.com/homestore/. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
Source: Milberg Weiss Bershad Hynes & Lerach LLP