Milberg Weiss announces class action lawsuit against BellSouth, accusing the company of pumping up the value of its securities

August 15, 2002

2 Min Read

NEW YORK -- The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on August 1, 2002, on behalf of purchasers of the securities of BellSouth Corporation ("BellSouth" or the "Company") (NYSE:BLS - News) between January 22, 2001 and July 19, 2002, inclusive.

A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: The action is pending in the United States District Court, Northern District of Georgia, located at Richard B. Russell Federal Building and Courthouse, 75 Spring Street, SW, Atlanta, GA 30303-3361, against defendants BellSouth Corporation, F. Duane Ackerman, W. Patrick Shannon and Ronald M. Dykes. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between January 22, 2001 and July 19, 2002, thereby artificially inflating the price of BellSouth securities. According to the complaint, defendants reported quarter after quarter of "record" financial results and financial growth despite a rapidly deteriorating market for telecommunications companies. However, unbeknownst to the investing public, (i) the Company had been recognizing advertising and publishing revenues, purportedly in connection with the performance of services for customers who had not been billed ("phantom customers"), and that $163 million of this revenue was required to be reversed; (ii) Generally Accepted Accounting Principles were violated because the transactions with "phantom customers" were not complete and there was not an "appropriate provision for uncollectible accounts." On July 22, 2002, defendants revealed that BellSouth's earnings had dropped by 67% for the second quarter of 2002, missing Wall Street estimates. The Company revealed that weak economic conditions in Central and Latin America had been, and were continuing to have a material, adverse impact on the Company's earnings and profitability. In response to the Company's July 22, 2002 revelation, BellSouth stock dropped by more than 18% to $22 per share. BellSouth executives, privy to the truth regarding BellSouth's financial condition, did not share in these losses, having sold millions of dollars of BellSouth stock. BellSouth Corp.

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