Cauley & Geller LLP Announces Class Action Lawsuit Against Reliance Group Holdings Inc. Seeking Damages On Behalf of Shareholders.Business Editors LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 3, 2000 The Law Firm of Cauley & Geller LLP LLP - Lower Layer Protocol has filed a class action in the United States District Court United States District Court In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. for the Southern District of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of on behalf of all individuals and institutional investors that purchased the common stock of Reliance Group Holdings Inc. ("Reliance" or the "Company") (NYSE NYSE See: New York Stock Exchange :REL) between Feb. 8, 1999, and May 10, 2000, inclusive (the "Class Period"). The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading statements regarding the Company. Specifically, as alleged in the Complaint, on March 31, 1999, defendants, in their financial statement filed with the SEC for its fiscal 1998 operations, stated that the Company's reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. contracts were valid, and that it expects to recover the full amount of such coverage. This statement was false and misleading, and defendants knew, or recklessly disregarded its falsity, because the Company was notified, prior to making the statement, that several reinsurance companies terminated their obligations to the Company. Because the Company's obligations to its insureds remained intact, the Company's expected losses exceeded $150 million. Furthermore, this $150 million loss should have been reflected as a charge to income, under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and was not, thereby masking the Company's true, and impaired, financial condition and prospects. On May 10, 2000, the Company reported that its first fiscal 2000 quarter would see an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $.31 per diluted share, which represented a greater loss than the comparable 1999 quarter. On that day, the price of Reliance stock closed at $2.625, a decline of more than 76 percent from the class period high of $11 per share. Cauley & Geller LLP has substantial experience representing investors in securities fraud class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax such as this. The firm has offices in Arkansas, California and Florida, but represents shareholders from throughout the nation. If you have any questions about how you may be able to recover for your losses, or if you would like to consider serving as one of the lead plaintiffs in this lawsuit, you must take appropriate action by Aug. 22, 2000. You are encouraged to call or e-mail the firm or visit the firm's Web site at www.classlawyer.com. |
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