Leap Wireless
Practice Area: Securities FraudHCL Partners Limited Partnership v. Leap Wireless International, Inc., et al.
Cohen Milstein represents the New Jersey Carpenters Pension and Benefits Funds (“Carpenters Funds”) in a securities fraud class action lawsuit pending in the United States District Court for the Southern District California. In addition to Leap Wireless, International, Inc. (“Leap” or the “Company”), the Defendants named in the action are certain officers and directors of Leap (the “Individual Defendants”).
This class action is brought on behalf of persons who purchased or otherwise acquired Leap securities between August 3, 2006 (the date Leap announced its financial results for the quarter-ended June 30, 2006) and December 26, 2007 (the date that Leap filed with the Securities and Exchange Commission restatements of its financial statements for fiscal 2004, 2005, 2006, and the first two quarters of 2007 (the “Restatements”)), inclusive (the “Class Period”) alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a) (the “Exchange Act”).
Plaintiff alleges that that Defendants’ misrepresentations and omissions artificially inflated Leap’s common stock price during the Class Period. Specifically, completely inadequate internal controls over antiquated and overtaxed operations systems, lack of automated processes and procedures, susceptibility to manual manipulation, and improper accounting practices led to serious accounting and financial reporting problems known to Leap and the Individual Defendants throughout the Class Period. Despite knowledge of these problems and the duties owed by public companies and their managers to accurately report results of operations, trends, and business prospects to investors and the market, with deliberate recklessness, Leap and the Individual Defendants caused the Company to report materially inflated service revenue, operating income and net income figures and to issue false assurances to investors regarding Leap’s financial results. Leap ultimately disclosed, on November 9, 2007, that its financial results had been inflated and that its internal accounting controls had been seriously deficient during the Class Period. As a result, Leap’s common stock price plummeted from $58.10 per share on November 8, 2007, to $36.72 per share on November 9, 2007, on over 11.3 million shares traded.
At a hearing before Judge Michael Anello on January 9, 2009, Judge Anello granted Defendants’ Motions to Dismiss the Consolidated First Amended Securities Class Action Complaint (“FAC”) without prejudice and granted Plaintiff’s request for leave to replead the allegations in the FAC. Thereafter, Plaintiff filed its Consolidated Second Amended Securities Class Action Complaint (“SAC”) on March 10, 2009 alleging violations of the Exchange Act against Leap and the Individual Defendants. Leap and the Individual Defendants filed a joint motion to dismiss the SAC on May 20, 2009. Plaintiff’s deadline to file Opposition to Defendants’ motion is August 5, 2009.