Friday, November 03, 2006

Revenge of the Bees, Err Trial Lawyers

Last week, we poked some good-natured fun at Xethanol Corporation (AMEX: XNL) for their odd press release lambasting plaintiff's counsel for issuing the required PSLRA notice.

Thanks to a tip from an astute reader, we get to poke a little more fun at Xethanol. Earlier this week, the company issued an "Open Letter to Shareholders Regarding Recent Lawsuit Filings."

It is a "Dear Shareholder" letter, though it is intended to be the opposite of a "Dear John" letter.

The letter, signed by Louis Bernstein, the company's president, interim CEO, and a board member, is, shall we say interesting:
First, a few words about the recent spate of lawsuits. As a lawyer with more than 25 years' experience managing the defense of various types of litigation, I assure you that the pattern you see here unfortunately has become the norm.

Like bees drawn to honey, law firms from near and far will file these kinds of lawsuits, trolling for clients as well as for prospective lead plaintiffs, and ultimately seeking to serve as lead plaintiffs' counsel in order to gain the largest possible share of attorneys fees at the end of the case - assuming their side prevails in the litigation.
While it is true that the PSLRA only requires the first plaintiff filing a securities class action to put out a notice (see Section 21D(a)(3)(A)(ii) of the Securities Exchange Act of 1934, here), assuming that subsequent notices comport with the applicable rules of professional conduct, there is nothing untoward about those notices.

Hey, at least he didn't call trial lawyers cockroaches.

Mr. Bernstein goes on to note:
Again, Xethanol is committed to defending these and any future similar lawsuits vigorously. To that end, the company is carefully considering our choice of defense counsel and we will inform you once we have made that decision.
So, we can look forward to a future "Scary Defense Counsel" press release from Xethanol.

Daily Trivia: Mr. Bernstein is indeed a licensed attorney in the State of New York, though he should probably update his registration, which still indicates that he is with Pfizer Inc. (NYSE: PFE).