Shareholders fire another HOMS lawsuit
January 28, 2003
Blame Merrill Lynch, Blodget for cash losses
By Marcie Geffner
Inman News Freatures
Homestore's shareholders have targeted two more pockets in their octopus-like effort to recover the money they lost when they invested in the company's once high-flying dot-com stock.
This time the targets are Merrill Lynch & Co. and Henry Blodget, a securities analyst and former first VP of Merrill Lynch who touted Homestore's stock. The law firm of Kaplan Fox & Kilsheimer has filed a class-action lawsuit against Merrill Lynch and Blodget on behalf of certain Homestore shareholders.
This latest lawsuit was filed last week in U.S. District Court for the Southern District of New York on behalf of people and entities that bought Homestore stock from Sept. 8, 1999, to Sept. 21, 2001. The company has restated its quarterly and annual financial results for certain of those prior periods.
The lawsuit alleges that Merrill Lynch and Blodget violated federal securities laws by issuing analyst reports that recommended Homestore stock and set price targets for the stock "without any reasonable factual basis," according to the law firm. The lawsuit also charges that Merrill Lynch and Blodget "failed to disclose significant material conflicts of interest," specifically the use of Blodget's "reputation" and reports to obtain Homestore's investment banking business for Merrill Lynch. The "false and misleading analyst reports" allegedly caused Homestore's stock to be traded at "artificially inflated levels," according to the lawyers.
New York-headquartered Kaplan Fox is also engaged in a lengthy list of other class-action securities lawsuits. These lawsuits include actions against Merrill Lynch and Blodget on behalf of certain shareholders of Exodus Communications, GoTo.com, Pets.com, Excite@Home Corp. and Merrill Lynch, actions against Credit Suisse First Boston Corp. on behalf of certain shareholders of AOL Time Warner, Razorfish and Agilent Technologies, and actions against Citigroup, Salomon Smith Barney and securities analyst Jack Grubman on behalf of certain shareholders of Williams Communications Group, XO Communications and Metromedia Fiber Network.
Westlake Village, Calif.-based Homestore operates the Realtor.com Web site for the National Association of Realtors and sells online marketing and promotion products to real estate brokers and salespeople.
A separate lawsuit on behalf of certain Homestore shareholders is pending against the company, some of its former executives, AOL Time Warner and a number of other companies that had business dealings with Homestore. The lead plaintiff in that class-action effort is CalSTRS, the gigantic state pension fund for California's teachers.
Copyright: Inman News Service