CalSTRS’ request comes in one of at least 19 such suits against Homestore.com alleging that the company lied in its financial press releases and used irregular accounting methods. As lead plaintiff, CalSTRS will represent the claims of all the shareholders, contract for legal representation, and provide testimony at trial, if necessary.
CalSTRS estimates its Homestore losses at more than $9 million. Between May 4, 2000 and December 21, 2001, the time cited in the lawsuits, CalSTRS purchased 431,123 shares of Homestore, investing a total of $13.4 million, according to a CalSTRS press release.
The CalSTRS suit also names as defendants:
- Stuart H Wolff, Homestore.com’s former chief executive officer and chairman of the board,
- Peter B Tafeen, former chief operations officer, and
- Joseph J Shew, former chief financial officer
As lead plaintiff, CalSTRS will represent the claims of all the shareholders, contract for legal representation and provide testimony at trial, if necessary.
According to the press release, the allegations against the company include that:
- the falsified revenue growth press releases issued in 2000 and 2001 on several occasions prompted a 25% stock price increase a day later,
- the three former executives covered up Homestore’s true financial position until they could sell nearly $30 million in their own Homestore stock, and
- homestore improperly accounted for the bartering of ad space on its Web site, which effectively overstated the resulting revenue
CalSTRS is the third largest US pension fund, with a $100.8 billion investment portfolio as of December 31, 2001.