Lawsuit initiated when more votes were cast than authorized/issued. I found this interesting.
Lawsuit Filed Against Major Financial Institutions Alleging a Conspiracy to Engage in Illegal Naked Short Selling of TASER International Inc. and to Create, Loan and Sell Counterfeit Shares of TASER Stock
Last update: 5/28/2008 11:00:00 AM
ATLANTA, May 28, 2008 /PRNewswire via COMTEX/ -- Today the legal consortium of The O'Quinn Law Firm and Christian Smith & Jewell, both of Houston, Texas and Bondurant, Mixson & Elmore, LLP of Atlanta, Georgia filed a Complaint in the State Court of Fulton County, Georgia on behalf of certain shareholders of TASER International Inc. ("TASER") against eight of the largest Wall Street firms, including Bank of America Securities LLC, Bear Stearns Securities Corp., Credit Suisse USA Inc., Deutsche Bank Securities, Inc., Goldman Sachs Group, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley & Co. Inc., UBS Securities LLC. The Complaint accuses the defendant firms of engaging in a conspiracy to manipulate the market for TASER stock through naked short selling resulting in the creation, loan and sale of counterfeit TASER shares. (Naked short selling involves the practice of selling stock short without borrowing or otherwise obtaining shares of that stock. When a defendant firm short sells shares of TASER stock it does not possess or intend to obtain, that sale can result in the creation of counterfeit shares because the short seller is in effect introducing additional shares into the market rather than engaging in a transaction using existing shares).
According to the seventy-page Complaint, the defendants' illegal naked short selling of TASER stock flooded the market with counterfeit TASER shares. For example, although in 2005 TASER had authorized and issued only approximately 60 million shares of common stock, more than 80 million votes were cast at the company's annual meeting.
The Complaint accuses the defendant firms of violating Georgia's Racketeer Influenced and Corrupt Organization (RICO) Act. "These are not isolated incidents: we believe the trading data evidences an ongoing and coordinated effort to violate securities and other laws," stated Attorney Wes Christian.
The Complaint describes the various means the defendant's have allegedly employed in an effort to conceal their unlawful conduct, including citing instances where the defendant firms have marked short sales as long positions, submitted inaccurate short interest reports and inaccurately netted short interest positions against longs. The Complaint also identifies specific instances in which defendant firms have been fined by securities regulators for this very conduct.
According to the Complaint, by creating, loaning and selling counterfeit shares, the defendant firms have diluted TASER stock and artificially depressed its value, harming TASER shareholders. Attorney Christian promised: "We will work tirelessly to redress the wrongs that our clients have suffered."
SOURCE Christian Smith & Jewell; Bondurant, Mixson & Elmore, LLP
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