Cost Overruns on Fixed Price Defense Contracts Plague Raytheon Company, Says The Pomerantz Firm
NEW YORK --- Pomerantz Haudek Block Grossman & Gross LLP has filed a class action suit against Raytheon Company ("Raytheon'' or the "Company'') and two of the Company's senior officers. The case was filed in the United States District Court for the District of Massachusetts on behalf of all those who purchased the Class A or Class B common stock of Raytheon Company during the period between March 30, 1998 and October 11, 1999, inclusive (the "Class Period'').
The Complaint charges that Raytheon violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements during the Class Period in order to conceal negative trends in the Company's business. Raytheon also allegedly omitted to disclose that the Company was behind schedule and experiencing cost overruns on several fixed price defense contracts, which led to Raytheon taking a significantly higher material charge against 1999 third quarter earnings than was previously announced.
Specifically, the complaint alleges that the Company omitted to disclose in its financial statements that it was violating generally accepted accounting principles by prematurely recording revenue on contingent sales contracts prior to actual performance.
Raytheon allegedly made these false and misleading statements in order to artificially inflate the price of its stock to support the company's acquisition of several companies using company stock as consideration. As a result of defendants' false and misleading statements, the price of Raytheon's common stock was artificially inflated during the Class Period.
The market first learned of Raytheon's misrepresentations and omissions during several disclosures made by the Company on October 12, 1999. The market reaction to the news was disastrous. The price of Raytheon class A stock lost more than 46% of its value; the price of Raytheon class B stock lost more than 44% of its value, erasing almost $4.5 billion in market value.
The Pomerantz firm is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, over 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multi-million dollar damages awards on behalf of class members.
The Pomerantz firm's Senior Partner, Stanley M. Grossman, leads a team of legal professionals who litigate in courts throughout the United States. The Firm affiliates, as necessary, with other highly qualified counsel throughout the nation. Mr. Grossman, formerly president of the National Association of Securities and Commercial Attorneys, was recently invited to testify before the House Subcommittee on Courts and Intellectual Property concerning the Class Action Jurisdiction Act of 1998. Mr. Grossman aided congressional assistants in the drafting of this bill.
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Cost Overruns on Fixed Price Defense Contracts Plague Raytheon Company, Says The Pomerantz Firm
