SOURCE: BearingPoint, Inc.

May 12, 2005 15:08 ET

Institutional Investor Announces Class Action Lawsuit Against BearingPoint Inc. (NYSE: BE)

NEW YORK -- (MARKET WIRE) -- May 12, 2005 -- Schoengold Sporn Laitman & Lometti, P.C. filed a class action lawsuit for one of its institutional investor clients against BearingPoint Inc. ("BearingPoint" or the "Company") (NYSE: BE) and certain key officers and directors in the United States District Court for the Eastern District of Virginia. This action has been brought on behalf of all purchasers of BearingPoint securities during the period between April 14, 2003, and April 21, 2005, (the "Class Period"). If you purchased BearingPoint securities during the Class Period and would like to join the action pursuing securities claims against the Company and its officer and director defendants, you may do so by visiting Schoengold Sporn Laitman & Lometti's website at www.spornlaw.com or contacting Schoengold Sporn Laitman & Lometti, toll free at (866) 348-7700 or via e-mail at shareholderrelations@spornlaw.com. However, please note that the deadline to seek lead plaintiff status in this case expires June 24, 2005.

The complaint alleges that during the Class Period, defendants made materially false and misleading statements regarding the Company's business and prospects. On March 17, 2005, BearingPoint announced that it was delaying the filing of its annual report on Form 10-K. According to BearingPoint, it had experienced significant delays in completing its consolidated financial statements. The delays were due, in part, to: (a) additional substantive procedures necessary to validate financial information due to control deficiencies; (b) the need to confirm the financial information generated by the Company's new financial accounting system, particularly in the area of revenue recognition; and (c) the Company's simultaneous, ongoing efforts to complete management's assessment of its internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

Then on April 20, 2005, BearingPoint shocked the market, disclosing that it had found errors in its financial statements spanning the past two years, that the SEC had begun an investigation into its accounting, and that it had fired nine executives. More specifically, the Company stated that: during the fourth quarter of the fiscal year ended December 31, 2004 ("FY04"), BearingPoint determined that a triggering event had occurred, which caused the Company to perform a goodwill impairment test. As a result of an initial impairment analysis, on March 17, 2005, the Company determined that a material, non-cash charge would be taken during the fourth quarter of FY04 as a result of the impairment of its goodwill with respect to the operations in its Europe, the Middle East and Africa ("EMEA") segment. The Company estimated that the amount of the impairment charge would be $250 million to $400 million.

BearingPoint also stated that the following previously issued reports should not be relied upon due to errors in those financial statements: (a) its Form 10-Qs for each of the first three quarters of FY04; (b) its Form 10-K for the six-month transition period ended December 31, 2003; and (c) its Form 10-K for the fiscal year ended June 30, 2003. On this news, shares of BearingPoint dropped $2.49 per share -- or 32% -- from $7.77 per share on April 20th to $5.28 per share on April 21st, with 67.7 million shares traded, or 17 times its daily trading volume.

According to the complaint, the true facts -- known by the defendants -- but concealed from the investing public, were as follows: (1) that the Company had materially overstated its net income and earnings per share and undervalued its identifiable intangibles (goodwill) by approximately $250-400 million; (2) that the Company had inflated its earnings by improperly accounting for restructuring charges relating to acquisitions; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times.

If you purchased BearingPoint securities during the Class Period and either sold those securities at a loss or still hold them, you may request that the Court appoint you as a lead plaintiff. However, you must do so before June 24, 2005.

Schoengold Sporn Laitman & Lometti was established in 1962 and has specialized in securities fraud litigation for over 35 years. The firm was cited by the Wall Street Journal in a study of the largest recoveries, as a percentage of overall damages, for its recoveries in the Anadigics and Versatility cases, which ranked first and third for recovering 44% and 30%, respectively, of plaintiffs' overall losses. Most recently, in 2004, the firm recovered $40 million for a class of Nicor, Inc. shareholders, representing approximately 35% of reasonably recoverable damages.

If you would like to further discuss your rights, you may call collect or otherwise contact the undersigned, who will be pleased to assist:

Contact Information

  • CONTACT:

    Jay P. Saltzman, Esq.
    Frank R. Schirripa, Esq.
    Schoengold Sporn Laitman & Lometti, P.C.
    19 Fulton Street, Suite 406
    New York, New York 10038
    Tel: (212) 964-0046
    Fax: (212) 267-8137
    Toll Free: (866) 348-7700
    E-Mail: shareholderrelations@spornlaw.com
    Website: www.spornlaw.com
    Schoengold Sporn Laitman & Lometti, P.C.