Tuesday, August 01, 2006

The Scarlet Letter

Yesterday, the law firm of Klafter & Olsen LLP issued a press release announcing the filing of a securities class action against Rambus, Inc. (NASDAQ: RMBS).

Several class actions had already been filed against Rambus, following the May 30 and June 27 announcements that Rambus was investigating (and had found problems with) historical option granting practices at the company.

This was no ordinary press release though. The title screamed:
Klafter & Olsen LLP Files Class Action Lawsuit Against Options Backdater Rambus, Inc.
The choice of language leapt out as most PSLRA press releases tend to sprinkle the word "allegedly" before any factual allegations are presented. As an example, see this earlier press release from another firm that filed a complaint against Rambus. The necessity of the introductory "allegedly" was negated for the Klafter & Olsen release however, as Rambus had already admitted to the conduct with their June 27 announcement.

I'm looking forward to future press releases colorfully announcing the filing of complaints against admitted "GAAP Violators" and "Premature Revenue Recognizers," among others.

The Rambus litigation is pending in the United States District Court for the Northern District of California.

No comments: