Compound Semiconductor Manufacturer EMCORE Files Civil RICO, Fraud and Negligence Lawsuit Against PricewaterhouseCoopers, PwC's CEO and 8 other partners.

NEW YORK--(BUSINESS WIRE)--Nov. 18, 1999--

Alleges PwC Partners Owned EMCORE Stock During 1998 Audit, Violated Independence Rules of Accounting and Caused EMCORE to Delay a Critical Secondary Offering

The New York law firm of Kasowitz, Benson, Torres & Friedman LLP announced today that its client, EMCORE Corporation (NASDAQ: EMKR), a leading designer, developer and manufacturer of compound semiconductor wafers and devices, has filed a multi-million dollar civil RICO, fraud and negligence lawsuit against the accounting firm of PricewaterhouseCoopers LLP ("PwC"), PwC's Chief Executive Officer James Schiro, 8 other PwC partners and PwC's in-house counsel, Walter Ricciardi, in the U.S. District Court for the District of New Jersey. EMCORE is seeking compensatory, treble and punitive damages arising from PwC's violations of the strict independence rules which bar accountants from owning shares in companies they audit.

In the complaint, EMCORE alleges that PwC partners, including CEO Schiro, owned approximately 140,000 shares of EMCORE during the period when PwC was conducting the 1998 audit of the Company in preparation for a critical secondary offering in which EMCORE was preparing to raise approximately $75 million. As a high-technology company that invests heavily in R&D and joint ventures with other companies, EMCORE is critically dependent upon timely financing.

The complaint alleges that PwC partners repeatedly assured EMCORE, both orally and in writing, that they were "independent" and that the audit would be performed "in accordance with generally accepted auditing standards." The complaint alleges that on February 1, 1999, one day before EMCORE's planned SEC filing for the secondary offering, PwC refused to sign the required consent to include its audit in the filing because, despite numerous representations to the contrary, some PwC partners not only owned stock during the audit, but still owned stock at that time. EMCORE was eventually forced by the SEC to obtain a re-audit, thereby delaying the secondary offering by more than three months.

Marc E. Kasowitz, of the New York law firm of Kasowitz, Benson, Torres & Friedman LLP, EMCORE's counsel, stated, "This is a classic example of a fiduciary putting its interests over those of a trusting client and, by doing so, causing serious damage. PwC partners repeatedly misrepresented to EMCORE that they had taken all necessary steps to maintain their independence and that they could assure EMCORE that independence issues would have no adverse impact on EMCORE's offering or other business plans."

Kasowitz added, "After PwC caused EMCORE to delay its important public offering, PwC partners proceeded to dump their stock in the market on the eve of an earnings announcement, contributing to a more than 20% fall in EMCORE's stock over a three-day period. Then, in June, 1999, after EMCORE had been forced by the SEC to obtain a costly re-audit and was finally readying to file its much delayed secondary offering, PwC threatened to withhold its consent to including EMCORE's 1996 and 1997 audits unless EMCORE released PwC from all legal liability. Following EMCORE's refusal to do so, PwC agreed to sign the consent and, on June 11, 1999, more than three months late, EMCORE finally consummated its secondary offering."

Kasowitz concluded, "PwC's egregious conduct at a crucial time when EMCORE was trying to raise capital to execute its business plan demonstrates PwC's reckless indifference to the consequences of its actions to EMCORE and its conscious disregard for the public interests which the federal and state laws mandating auditor independence are designed to protect."

EMCORE Corporation is the leading vertically integrated materials science company in the field of compound semiconductors. EMCORE offers comprehensive solutions for the compound semiconductor industry and its customers by operating six internal divisions: EMCORE Research & Applications Laboratory, TurboDisc(R) production systems, EMCORE Electronic Materials (E2M) epitaxial wafer foundry, and EMCORE Electronic Devices (E2D), MODE, and EMCORE Photovoltaic discrete device fabs. For further information about EMCORE, visit http://www.emcore.com.

Kasowitz, Benson, Torres & Friedman LLP, founded in 1993, specializes in litigation and bankruptcy and numbers over 80 lawyers in its New York, New Jersey and Houston offices.