Class action complaints filed against CP Ships
Two class action lawsuits have been filed against CP Ships Ltd. in federal courts in New York and California.
In the New York complaint, plaintiff Kirvin Hendrix alleges he 'purchased CP Ships securities at artificially inflated prices ' and has been damaged thereby.' Hendrix further alleges three executives of CP Ships between April 23, 2003, and Aug. 4, 2004, 'knew or recklessly disregarded the fact that adverse facts had not been disclosed to, and were being concealed from, the investing public.'
The executives cited as defendants in Hendrix's complaint were Raymond R. Miles, chief executive officer and chairman of CP Ships; Frank J. Halliwell, chief operating officer and later CEO, and Ian J. Webber, chief financial officer. Hendrix's class action complaint was filed in the U.S. District Court for the Southern District of New York, by the law firm of Schatz & Nobel P.C.
'Each of the above officers of CP Ships, by virtue of their high-level positions with the company, directly participated in the management of the company ' and was privy to confidential information concerning its business, operations, growth financial statements and financial condition,' according to Hendrix's complaint.
The complaint further alleges that the defendants 'were involved in drafting, producing, reviewing and disseminating ' false and misleading statements' between the dates cited 'in violation of federal security laws.'
'Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of CP Ships securities by disseminating materially false and misleading statements. The scheme deceived the investing public ' and caused Plaintiff and other members of the Class to purchase CP Ships securities at artificially inflated prices,' Hendrix alleges.
'The ongoing fraudulent scheme described in this complaint could not have been perpetrated over a substantial period of time, as has occurred, without the knowledge and complicity' of the defendants cited, the complaint alleges.
Both complaints claimed the plaintiffs would not have purchased or acquired CP Ships securities had they known prices were 'artificially inflated.'
Hendrix also argues that the statutory safe harbor provided for forward-looking statements under certain circumstances did not apply 'to any of the allegedly false statements pleaded in this complaint,' because 'the particular speaker knew that the particular forward-looking statement was false ' when made.'
Hendrix's compliant asked for a jury trial to determine if the three executives of CP Ships had each violated Section 10 (b), Rule 10b-5, and Section 20(a) of the U.S. Securities Exchange Act of 1934. The complaint also asked for an award of 'compensatory damages in favor of plaintiff and the other class members against all defendants, jointly and severally, for all damages sustained ' including interest thereon.'
In a second class action complaint, Raymond Tyler, identified as a purchaser of 'CP Ships publicly traded securities' in court papers obtained by Shippers' NewsWire, alleges 'wrongful conduct' on the part of four top executives of CP Ships in a complaint in federal court in California.
Tyler said in the complaint that his action was 'on behalf of purchasers' of such securities 'during the period from Jan. 19, 2003 to Aug. 9, 2004,' in which the executives cited allegedly 'caused CP Ships' shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, CP Ships was able to complete a convertible note offering, raising net proceeds of $200 million ' and obtain a new $525 million credit facility. On Aug. 9, just months after this offering and credit facility was completed, CP Ships revealed that its results for 2002-2003, and possibly other quarters, were false when reported.'
Tyler's complaint alleges that four CP Ships executives — Miles, Halliwell, Webber and John D. McNeil, chairman of the audit committee of CP Ships — were 'liable for the false statements' made 'as 'group-published' information.'.
Tyler complaint alleges that all four defendants 'assisted in the preparation of the false financial statements and repeated the contents therein to the market.' CP Ships 'subsequently admitted it would restate its 2002-2003 results, eliminating $30-$35 million in improperly reported net income for 2003 and $7 million in net income for 2002,' the complaint said.
'To the extent that management offers securities ' to the public, it voluntarily accepts wider responsibilities for accountability to prospective investors and to the public in general,' Tyler's complaint asserted.
Tyler's complaint asked for a jury trial to determine if the four executives of CP Ships had violated, as alleged, sections 10(b) and 20 (a) of the Exchange Act, and for unspecified 'damages, including interest ' and other such relief as the court may deem proper.'
Tyler's class action lawsuit was filed in the U.S. District Court for the Central District of California, Western Division, by the San Diego, Calif., law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP.
'We are aware that a number of class action lawsuits have been announced. However, we have not yet been served and therefore cannot comment,' Elizabeth Canna, vice president for corporate communications for CP Ships, told Shippers' NewsWire.