Shareholder Files Lawsuit Accusing Xerox of Stock Fraud
Press release from the issuing company
HARTFORD, February 15, 2001 – The law firm of Berman DeValerio & Pease LLP filed a lawsuit today that charges Xerox Corporation (NYSE: XRX) with defrauding shareholders by illegally pumping up the company’s stock price.
The class action was filed in the United States District Court for the District of Connecticut. The complaint seeks damages for violations of federal securities laws on behalf of all investors who bought Xerox stock between February 15, 1998 and February 6, 2001 (the “Class Period”).
Berman DeValerio & Pease has represented defrauded investors in class actions for nearly two decades. The complaint says that Xerox and several of its top officers reported false financial results during the class period, failing to adhere to the standard accounting practices the company claimed to follow. Among other things, Xerox is charged with:
Improperly recognizing revenues from its leasing operations by booking up front those lease payments attributable to future supplies and services.
Boosting short-term results by overstating the value of future payments from leases originated in developing countries.
Failing to write off mounting bad debts and improperly classifying transactions in its Mexico operations, which resulted in $119 million in charges in the second and third quarters of fiscal 2000.
Xerox issued a statement about the “irregularities” in Mexico on June 16, 2000, falsely portraying them as an aberration perpetrated by rogue executives. But on February 6, 2001, a Wall Street Journal article reported allegations of accounting fraud that went far beyond Mexico. Meanwhile, Xerox shares fell from as high as $124 a share during the Class Period to just $4.43 a share, resulting in hundreds of millions of dollars in losses to Class members. The company’s accounting practices are now the subject of a Securities and Exchange Commission (SEC) investigation.
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