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CU Takes a Massive Hit

Started by Abrams-migration,

37 posts in this topic

gmarguli

gmarguli

Posted
Posted

If this is true (and I have no reason to doubt it is), this is an EXTREME blow to CU. The money ($10.56MM) is basically meaningless and can be paid out of cash reserves. It's the attention that it will bring to CU and their "handling of business" that will be the real problem.

 

PH700N.jpg

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HaydenTubbs

HaydenTubbs

Posted
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It's the attention that it will bring to CU and their "handling of business" that will be the real problem.

 

Maybe that's why David Hall is no longer the president of PCGS,trying to get out of some blame?

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RobertB

RobertB

Posted
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Haha. I posted a link on the PCGS boards to see if anyone had any more info. and I told my wife, "watch, it'll be removed within 30 minutes." I was wrong. it was removed in less than two.

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RobertB

RobertB

Posted
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I swear to God that sucker disappeared for a few minutes. What the hell? Pulled for official review? Anyways.........anyone have a link to the story?

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Tradedollarnut

Tradedollarnut

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I would imagine a good chunk of that judgement is covered by insurance .... however, there are insinuations on the Yahoo board that they are now open to shareholder lawsuits over lack of disclosure.

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gmarguli

gmarguli

Posted
Posted
I would imagine a good chunk of that judgement is covered by insurance .... however, there are insinuations on the Yahoo board that they are now open to shareholder lawsuits over lack of disclosure.

 

Insurance coverage for an act that might be viewed as fraud?

 

If it is true that they didn't report this lawsuit in the filing for their secondary offering, they should be more worried about a proactive DA looking for some jail time for the officers rather than shareholder lawsuits.

 

It'll be very interesting to see where this stock opens tomorrow. Sure lucky that some insider sold more than half his holdings earlier this year. 893scratchchin-thumb.gif

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gmarguli

gmarguli

Posted
Posted
The stock is currently UP .14 at $14.75 on light volume of 3906 shares. The low is $14.52 and the high is $15.19.

 

And no announcement on the verdict. 893scratchchin-thumb.gif

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gmarguli

gmarguli

Posted
Posted
The way the stock is reacting leads one to believe either:

 

The report of the award is false

 

or

 

The market had already factored in a larger award into the price of the stock

 

or

 

There are so few informed investors in this stock that none of them know of the verdict. It's not like this is a stock followed by many analysts. My guess is that most investors in it also buy PCGS moderns and think they are the wave of the future.

 

I'm surprised that there is so little volume. Regardless of why the stock hasn't moved, you'd think there were be quite a bit of activity. Perhaps news of the verdict is false...

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chinook

chinook

Posted
Posted

Now down about 33c on 1.2x ave volume.

 

The chart has looked lousy for months anyway but so far investors seem to be saying "ho hum".

 

I do find it interesting when there are management changes just before news.

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Oldtrader3

Oldtrader3

Posted
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Actually, I would be surprized if CU was not prepared for the verdict. In my experience, all the lawsuits (but one case) of this ilk that I have ever seen do not take the insiders by surprise. They know they are losing before the verdict, because good lawyers can usually call the verdict.

 

Replacing their officers (i.e. HRH) usually indicates rats leaving a sinking ship.

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Here

Here

Posted
Posted
I swear to God that sucker disappeared for a few minutes. What the hell? Pulled for official review? Anyways.........anyone have a link to the story?

 

 

Don't worry, you weren't imagining things. I see that once in a while on the PCGS boards too. I just figured someone just posted a reply or something and it takes a second to re-align itself (the thread) into whatever position it falls on the 1st page.

 

 

 

Jerry confused-smiley-013.gif

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gmarguli

gmarguli

Posted
Posted
The stock is currently UP .14 at $14.75 on light volume of 3906 shares. The low is $14.52 and the high is $15.19.

 

And today after word appears to have gotten out, the stock took a nice dump of about 10% knocking $12MM off the value of CU.

 

Now the real fun begins: shareholder lawsuits and SEC investigations and hopefully with some prison time for those responsible.

 

 

 

Press Release Source: Boudreau, Albert & Wohlfeil LLP

 

Former Collectors Universe Executive Wins $10.5 Million Verdict

Wednesday November 9, 8:03 am ET

Boudreau, Albert & Wohlfeil Represents Plaintiff

 

SANTA ANA, Calif.--(BUSINESS WIRE)--Nov. 9, 2005--Boudreau, Albert & Wohlfeil LLP announced today that an Orange County jury awarded a former executive of Collectors Universe, William Miller, with awards that could total in excess of $10.5 million against Collectors Universe (NASDAQ:CLCT - News). The jury found that Collectors Universe used Miller's name on 14,060 Certificates of Authenticity without his permission.

 

"We are grateful that the jury saw fit to hold Collectors Universe accountable for its actions," said Andrew Albert, lead attorney on the case and partner at the law offices of Boudreau, Albert & Wohlfeil LLP. "Their verdict is an important step in allowing Bill to reclaim his good name and to protect the public from false authentication services."

 

In his suit, filed August 2004, Miller alleged that Collectors Universe placed his name and signature on Certificates of Authenticity which indicated that he had examined items being authenticated, when, in fact, he had never performed a single authentication for the company's PSA/DNA Division, under which the certificates were issued.

 

Miller's suit alleged violation of his right to privacy by misappropriating his name. Under California Civil Code section 3344 compensatory damages of $750 per unauthorized use are presumed. In addition, court costs and attorney's fees are recoverable. The jury found that Miller had been harmed by Collectors' unauthorized use of his name.

 

The court has previously ruled in the first phase of the trial that for each unauthorized use of his name, Miller may recover $750. The jury also awarded Miller Collector's profits made through the use of his name. Attorney's fees may also be added to the judgment.

 

Miller said he feels vindicated by the clear-cut jury verdict. "It's horrible enough to have your name taken from you purely for someone else's financial gain, but it's another thing to be used as a pawn to deceive or even defraud the public. For the rest of my life, I will live with the uncomfortable feeling that at any time I might be held responsible for someone who authenticated an autograph I never looked at. When an item turns out to be not genuine, as we have already found to be the case in a number of instances, it's my name which will bear the responsibility and my reputation, carefully built over 15 years, which will be damaged."

 

 

Contact:

Heying & Associates

Jade Berggren, 619-295-9262

jberggren@heying.com

 

Source: Boudreau, Albert & Wohlfeil LLP

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gmarguli

gmarguli

Posted
Posted
I hear funeral music playing in the background...

 

lol. The reports of their demise are greatly exaggerated.

 

Agreed. CU will survive and with competent management, they can even turn this into a positive and thrive. However, current management might not survive and competent management isn't something that CU exactly has an abundance of.

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Tradedollarnut

Tradedollarnut

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I heard the judge in the case issued a statement today saying that the amount of the judgement has NOT been set and ordering the attorneys for Miller to withdraw their press release.

 

Seems to me that:

 

1) the judge is now PO'd and likely to penalize Miller for his attorneys' rather presumptuous action of buying a press release.

 

2) if the judgement is less than the amount stated in the press release then CLCT will have just cause to sue Miller's attorneys for damages.

 

3) the judge's statement reinforces management's right to the opinion that the lawsuit was not material [ie: their interpretation of the statute is that he is due $750 or their profits in the amount of $14k, whichever is greater]. Whether their opinion was correct would seem to me to be irrelevant in a securities fraud case - what matters is whether the opinion was reasonably held.

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gmarguli

gmarguli

Posted
Posted

I heard the judge in the case issued a statement today saying that the amount of the judgement has NOT been set and ordering the attorneys for Miller to withdraw their press release.

 

He stated that the HEADLINE of the press release was misleading. From what it appeared to me, it was because it sounded like the jury awarded $10.5 million when they did not as that was not part of their duty. That award will (may) be awarded by the judge. However, the judge appears to agree with the jury on the number of certs that CU issued. From what I've read, it appears that the penalty is $750 per cert and not up to the judge to decide. It's a set amount based on damages (i.e. the actual damages OR $750, whichever is greater). The $14K was the profit that CU was being penalized.

 

 

1) the judge is now PO'd and likely to penalize Miller for his attorneys' rather presumptuous action of buying a press release.

 

Doubtful. A judge might hurt the lawyers, but not a victim.

 

 

2) if the judgement is less than the amount stated in the press release then CLCT will have just cause to sue Miller's attorneys for damages.

 

First off, I doubt there is any way they would do this. It'd do nothing but keep this case and their awful behavior in the public eye. I'm sure they want this to go away as fast as possible.

 

Secondly, from S&P: "Collectors Universe (CLCT ) says a jury verdict gives former Collectors Universe executive William Miller awards that could total over $10.5 million against the company; the jury found the company used Miller's name on 14,060 Certificates of Authenticity without his permission. " Kind of hard to argue the press release caused damage when they are admitting it could be $10.5MM.

 

 

 

3) the judge's statement reinforces management's right to the opinion that the lawsuit was not material [ie: their interpretation of the statute is that he is due $750 or their profits in the amount of $14k, whichever is greater]. Whether their opinion was correct would seem to me to be irrelevant in a securities fraud case - what matters is whether the opinion was reasonably held.

 

The opinion of this judge means nothing. It will be the opinion of the jury in the shareholder lawsuit (should there be one) that will matter.

 

If it really were the profit or $750, they why didn't they settle? They've probably paid hundreds of thousands in legal fees. Wouldn't it have been easier to settle or ask the judge to clarify what the potential damages are in the case.

 

They just did a secondary offering. They needed to disclose everything. They can cover their eyes and pretend this case didn't exist or it was a minor dollar amount if they lost, but the fact they failed to mention it at all will likely be their downfall. Why not mention it and state that management feels it has no merit and a worst case is nominal dollar judgement? This wasn't some baseless suit, it had a real chance of winning and the potential to be a very large verdict.

 

BTW, here is part of the corrected press release: "Under California Civil Code section 3344 compensatory damages of $750 per unauthorized use are presumed.[...]

 

The court has previously ruled in the first phase of the trial that for each unauthorized use of his name, Miller may recover $750. The jury also awarded Miller Collector's profits made through the use of his name. Attorney's fees may also be added to the judgment."

 

 

We'll all know in a few days what the total dollar amount is going to be. And if it is large, we'll know in a year or so whether the shareholder lawsuit has merit and if anyone is going to prison.

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gmarguli

gmarguli

Posted
Posted

Looks like the stock just got downgraded by Thomas Weisel to Peer Perform. Down another 93c (7.06%) or a little over $8 million knocked off the value of this company.

 

Anyone want to predict where this stock takes its dead cat bounce?

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IGWT

IGWT

Posted
Posted

A dead cat must plummet from a great height to bounce. The stock wasn't exactly soaring before it dropped. You'll remember that just one sick submitter was enough to reduce the company's value a couple of months ago.

 

992231-LilEarl.jpg

 

Take no joy (not even the pleasure of a well deserved "I told you so"); corporate shenanigans of this kind -- a violation of trust -- hurt us all.

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