Financial Accounting Blog

Thursday, June 17, 2004

Fraud. Shareholders Sue Alliance Gaming claiming the corporation took advantage of its artificially inflated stock price at the expense of investors. According to the complaint, Alliance issued a series of materially false statements that artificially inflated its share price and then allowed certain executives to sell $3.6 million in shares. Then on June 8th, the company lowered earnings due to various reasons estimating a drop in earnings of ~$.08 a share. Since this report the stock price has dropped 25%.
"The defendants actively concealed from the public that the company was experiencing massive problems [and] delays associated with the company's wide area progressive games in Nevada due to regulatory hold-ups," said Lerach Coughlin Stoia & Robbins, in a statement, calling the company's previous earnings guidance "grossly inflated."