NEW YORK, Feb. 13, 2002 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) has filed a class action on behalf of purchasers of the securities of Global Crossing, Ltd. ("Global Crossing" or the "Company") (NYSE:GX) during the period between January 2, 2001 and January 30, 2002, inclusive (the "Class Period"). The case was filed in the United States District Court for the District of New Jersey. Named as defendants are certain senior executive officers and directors of the Company. The Company filed for bankruptcy on January 28, 2002 and its stock has been delisted from the NYSE.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by reporting inflated revenues and earnings for the Company during the Class Period. As a result, it is alleged, Global Crossing's stock was artificially inflated throughout the Class Period causing injury to plaintiff and the other Class members. Defendants, meanwhile, allegedly profited by nearly $150 million in insider stock sales.
As charged in the Complaint, among other things, Global Crossing would "trade" bandwidth capacity with other companies, allowing the Company to inflate its reported revenues, in violation of Generally Accepted Accounting Principles ("GAAP"). Specifically, Global Crossing would contract with telecommunications carriers to sell bandwidth capacity on Global Crossing's fiber-optic network. Such contracts provided the telecommunications carriers what is known as an indefeasible right of use ("IRU") of Global Crossing's network for a 20-year period of time. Global Crossing would report as revenue a substantial part of the 20-year proceeds gained from the IRU contracts, up-front, in one large sum. Then, Global Crossing would "trade" with the same telecommunications carriers by buying similar bandwith capacity for nearly identical amounts, recording the cost as a capital expense to be spread over the life of the contracts. Global Crossing would emphasize this capital expense as separate from operating expenses to its customers. In other words, it is charged that defendants caused Global Crossing to improperly recognize revenues from barter or even sham transactions. Indeed, the Securities Exchange Commission and the Federal Bureau of Investigation are reportedly investigating the Company's accounting practices.
It was only on January 30, 2002, that the public began to learn about the wrongdoing at Global Crossing when The Wall Street Journal and Los Angles Times reported that during at least 2001, the Company was engaged in barter transactions on which it improperly recognized revenue in violation of GAAP. By February 4, 2002, the Company admitted that a senior officer had informed the Company of these problems as early as August 2001. It has now been reported that the SEC had made inquiries regarding the Company's revenue recognition policies as early as July and August 2000.
If you purchased the securities of Global Crossing during the Class Period, you have until April 5, 2002 to ask the Court to appoint you as a lead plaintiff for the Class. To serve as a lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, to discuss this action or have any questions, please contact Andrew G. Tolan, Esq. of the Pomerantz firm at 888-476-6529 (or (888) 4-POMLAW), toll free, or at agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz firm, which has offices in New York and Chicago, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca