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Midway Hit With Rash Of Class Action Lawsuits
by Leigh Alexander
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July 19, 2007
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Law firm Schiffrin Barroway Topaz & Kessler has issued a statement giving notice of a class action lawsuit on behalf of all common stock purchasers of Midway Games (Stranglehold, Mortal Kombat series), and asking other possible complainants to join.
The complaint, filed in the United States District Court for the Northern District of Illinois, charges Midway and some of its officers and directors with violations of the Securities Exchange Act of 1934, and concerns Midway's alleged misrepresentation of and failure to disclose that it was "grossly underperforming because it was experiencing operational difficulties."
Further, according to the complaint, Midway's struggles would force it to engage in a $17 million restructuring, and require it to secure debt financing. The complaint alleges that these issues render Midway's previous financial and operational statements "lacking in any reasonable basis when made."
As a result of operational disclosures made by Midway between December 16, 2005 and May 24, 2006, the company's shares plummeted from $23.25 per share to $7.39 on May 25th -- cumulatively, a 67 percent value loss.
A barrage of similar, apparently linked class action suits have recently been filed by firms including Federman & Sherwood, Brower Piven, and Brian M. Felgoise, P.C.
Further details of the suit filed by Vianale & Vianale charge Midway execs with failure to disclose that they were disposing of their own shares based on insider info that Sumner Redstone -- a prominent investor whose large purchases of Midway stock were driving the market price for shares in the company upward -- intended to cease all further investment in Midway. The complaint also includes allegations of insider trading patterns against Midway president and CEO David Zucker.
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