The Pomerantz Firm charges MRV Communications Inc. with securities fraud -- MRVC

July 11, 2008

4 Min Read

NEW YORK -- Pomerantz Haudek Block Grossman & Gross LLP ( has filed a class action lawsuit in the United States District Court, Central District of California, against MRV Communications Inc. (``MRV'' or the ``Company'') (NasdaqGM:MRVC - News) and certain officers of the company for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The class action was filed on behalf of purchasers of the common stock of the Company between July 24, 2003 and June 5, 2008 (the ``Class Period'').

MRV Communications is a Delaware corporation which maintains its principal executive office in Chatsworth, California. The company supplies communications equipment and services to carriers, governments and enterprise customers worldwide. The complaint alleges that unbeknownst to investors and contrary to its public representations, MRV issued stock options that were deliberately backdated in order to provide improper windfalls to the individual defendants. Moreover, defendants compounded the fraud by improperly accounting for the backdated options, thereby, inflating reported results. Finally, the Company belatedly admitted that such misconduct had taken place.

The complaint specifically alleges that: (1) the Company backdated the actual grants of its stock options grants and improperly recognized stock-based compensation expenses related to its stock options grants; (2) the Company failed to disclose that the stock option grants had not been accounted for in accordance with Generally Accepted Accounting Principles (``GAAP''); (3) the Company materially understated tax expenses, since MRV had improperly deducted such expenses on its tax returns, thereby reducing the amount of taxes to the extent owed; and (4) the Company failed to accurately report its financial statements and will now have to restate its historical financial statements for the period between 2003 and 2008.

In a separate release:

NEW YORK -- Attorney Advertising. Notice is hereby given that a class action has been commenced in the United States District Court for the Central District of California on behalf of all purchasers of the common stock of MRV Communications, Inc. ("MRV" or the "Company") (NasdaqGM:MRVC - News) between March 31, 2003 and June 5, 2008, inclusive (the "Class Period").

The complaint charges that MRV and certain of its officers and directors violated federal securities laws Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, by issuing materially false and misleading statements regarding the Company's employee stock option grant practices and financial results. The complaint alleges that defendants caused or allowed MRV to issue statements that failed to disclose or misstated that: (i) MRV had problems with its internal controls that prevented it from issuing accurate financial reports and projections; (ii) because of improperly recorded stock-based compensation expenses, the Company's financial results violated Generally Accepted Accounting Principles; and (iii) the Company's public disclosures covering a seven-year period presented an inflated view of MRV's earnings and earnings per share, which would later have to be restated.

On June 5, 2008, MRV announced that it expects to restate its 2002 through 2008 financial statements, and that its previously issued financial statements, earnings press releases and similar communications should no longer be relied upon. The restatement relates to the previously undisclosed stock-option back-dating problems and accounting issues and occurred after the Company's earlier announced that a review of its options granting practices found no evidence that grant dates were designed to occur on dates with lower and more favorable exercise prices. MRV's management has recently stated that it is likely that these previous conclusions were incorrect. On this news, MRV's stock price fell approximately 24%.

Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired MRV's common stock during the Class Period, which is between March 31, 2003 and June 5, 2008. If you purchased or otherwise acquired MRV's common stock during the Class Period, you may no later than September 8, 2008 request that the court appoint you as lead plaintiff in the action.

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Stull, Stull & Brody, or other counsel of your choice, to serve as your counsel in this action. Stull, Stull & Brody has litigated many class actions for violations of securities laws in federal courts over the past 30 years and has obtained court approval of substantial settlements on numerous occasions. Stull, Stull & Brody maintains offices in New York and Los Angeles.

MRV Communications Inc. (Nasdaq: MRVC)

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