MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
ALAN SCHULMAN (128661)
DARREN J. ROBBINS (168593)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

KAPLAN, KILSHEIMER & FOX LLP
FREDERIC S. FOX
JONATHAN K. LEVINE
JANINE R. AZRILIANT
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: 212/687-1980

Attorneys for Plaintiff

[Additional counsel appear on signature page.]

1. This is a securities class action on behalf of all persons, other than defendants, who purchased the convertible debentures, 6.875% due 2003, ("convertible notes") of Leasing Solutions, Inc. ("Leasing Solutions" or the "Company") during the period between July 23, 1998 and November 9, 1998, inclusive (the "Class Period"). Leasing Solutions describes itself as a full service global leasing company specializing in leasing information processing and communications equipment, principally to large corporate customers.

2. During the Class Period, defendants made material misrepresentations about the financial condition and operating performance of Leasing Solutions. In particular, defendants falsely represented that the Company would meet analysts' consensus earnings per share numbers for the third quarter of fiscal 1998, that Leasing Solutions common stock was underpriced at $22 per share and that after the close of the third quarter, the Company had met analysts' expectations for the quarter.

3. Defendants' false and misleading statements concerning the Company's business and third quarter results drove Leasing Solutions convertible notes to a Class Period high of more than $109.

4. Defendants' fraudulent scheme began to unravel on October 21, 1998, when the Company announced that it was delaying the release of its third quarter results and that earnings per share in fact would be substantially lower than analysts' consensus expectations for the quarter. In reaction to this surprise announcement, Leasing Solutions common stock price fell by 54%, from $19.56 to $9.625 in one day. The price of the convertible notes declined to $56. However, this was not a full disclosure of the truth and Leasing Solutions common stock and convertible notes continued to trade at artificially inflated levels.

5. On November 9, 1998, after the close of the market, Leasing Solutions shocked the market with its announcement that, contrary to all prior representations, the Company would report a huge loss per share for the third quarter of 1998. The Company announced that the loss per share for the quarter would be $0.35 and that the loss was due primarily to non-cash adjustments of approximately $6.3 million to the book value of assets. The Company also announced that based in part on the effect of recent changes in its accounting treatment of short-term leases, it would be at or about break-even for the fourth quarter of 1998. Finally, the Company announced that defendant Steven L. Yeffa, the Executive Vice President and Chief Financial Officer of Leasing Solutions, had resigned and that an interim chief financial officer had been appointed as his replacement. Leasing Solutions common stock, which had traded as high as $10-1/2 in the days following the October 21, 1998 partial disclosure, dropped to as low as $7-1/2 per share on the final disclosure of this news. Similarly, Leasing Solutions convertible notes now trade at below $41, compared to the Class Period high of more than $109.

6. This Court has jurisdiction over the subject matter of this action pursuant to §27 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §78aa, and 28 U.S.C. §1331. The claims asserted herein arise under §§10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§78j(b) and 78t(a), and the rules and regulations promulgated thereunder by the SEC, including SEC Rule 10b-5, 17 C.F.R. §240.10b-5.

7. (a) Venue is proper in this Judicial District pursuant to §27 of the Exchange Act and 28 U.S.C. §1391(b). Many of the acts and transactions constituting the violations of law alleged herein, including the preparation and dissemination to the investing public of false and misleading information, occurred in substantial part in this District. In addition, Leasing Solutions maintains its principal executive offices within this District.

(b) Assignment of the action to the San Jose division is appropriate as a substantial part of the events or omissions identified herein occurred in Santa Clara County.

8. Defendants, directly and indirectly, used the instrumentalities of interstate commerce, including the mails and the facilities of the national securities markets, in connection with the acts, conduct and other wrongs complained of herein.

9. Plaintiff Martin J. Cooper purchased convertible debt of Leasing Solutions during the Class Period as described in the attached certification and was damaged thereby.

10. Defendant Leasing Solutions is a California corporation with its executive offices and principal place of business at 10 Almaden Boulevard, San Jose, CA. Leasing Solutions convertible notes are actively traded on the New York Stock Exchange.

11. Defendant Hal J. Krauter ("Krauter") was, at all relevant times, a member of the Board of Directors of Leasing Solutions and its President and Chief Executive Officer. Krauter is a co-founder of the Company, and, as of March 1, 1998, he owned more than 13% of the outstanding common stock of Leasing Solutions.

12. Defendant Steven L. Yeffa ("Yeffa") was, at all relevant times, the Executive Vice President and Chief Financial Officer of Leasing Solutions. Yeffa resigned on November 10, 1998, when the devastating results for the third quarter of 1998 were released.

13. Unless otherwise noted, the individuals named as defendants in ¶¶11-12 above shall hereinafter be collectively referred to as the "Individual Defendants."

14. The Individual Defendants, by reason of their executive positions with Leasing Solutions, Board membership and/or representations, and/or their ownership of Leasing Solutions common stock were controlling persons of the Company and had the power and influence, and exercised the same, to cause Leasing Solutions to engage in the conduct complained of herein. Leasing Solutions, in turn, controlled each of the Individual Defendants.

15. The named plaintiff brings this action as a class action pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure on behalf of a class consisting of all persons who purchased the convertible debentures, 6.875% due 2003, of Leasing Solutions during the period from July 23, 1998 through and including November 9, 1998 (the "Class"). Excluded from the Class are defendants, their past and present subsidiaries, affiliates and entities they control, and members of the immediate families of the Individual Defendants.

16. Members of the Class are so numerous and geographically dispersed that joinder of all Class members is impracticable. During the Class Period, there were in excess of $71.8 million of Leasing Solutions convertible notes outstanding, held by hundreds or thousands of record or beneficial owners.

17. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation.

18. Plaintiff's claims are typical of the claims of the members of the Class as plaintiff and all members of the Class sustained damages arising out of defendants' wrongful conduct in violation of federal law as complained of herein.

19. A class action is superior to other available methods for the fair and efficient adjudication of this controversy because joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation make it impossible for the Class members to individually redress the wrongs done to them.

20. There are questions of law and fact common to this Class which predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to this Class are:

(a) whether the federal securities laws were violated by defendants' acts as alleged herein;

(b) whether defendants participated in and pursued the common course of conduct complained of;

(c) whether the documents disseminated to the investing public, and other public statements made and/or caused to be made by the defendants during the Class Period, omitted and/or misrepresented material facts about the Company's business affairs, financial condition and current and future prospects;

(d) whether the defendants acted willfully, recklessly or negligently in omitting to state and/or misrepresenting material facts;

(e) whether the market price of Leasing Solutions convertible notes during the Class Period was artificially inflated due to the non-disclosure and/or misrepresentations complained of herein; and

(f) whether the members of the Class have sustained damages, and, if so, the proper measure of those damages.

21. Plaintiff knows of no difficulty which will be encountered in the management of this litigation which would preclude its maintenance as a class action.

22. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-market doctrine. The market for Leasing Solutions convertible notes was at all times an efficient market for the following reasons, among others:

(a) Leasing Solutions met the requirements for listing and was listed on the New York Stock Exchange ("NYSE"), a highly efficient and automated market;

(b) As a regulated issuer, Leasing Solutions filed periodic public reports with the SEC and the NYSE;

(c) The volume of trading in Leasing Solutions convertible notes was substantial during the Class Period;

(d) Leasing Solutions was followed by various securities analysts who wrote reports which were available through various automated data retrieval services;

(e) Leasing Solutions disseminated information on a market-wide basis through various electronic media services, including issuing press releases through the Business Wire news service;

(f) The convertible notes were convertible into 28.6533 shares each of Leasing Solutions stock and thus reacted in price similar to the common stock of Leasing Solutions; and

(g) The market price of Leasing Solutions convertible notes reacted efficiently to new information entering the market.

23. The foregoing facts clearly indicate the existence of an efficient market for trading of Leasing Solutions common stock and make applicable the fraud-on-the-market doctrine. Similarly, plaintiff and the other members of the Class are entitled to a presumption of reliance with respect to the misstatements and omissions alleged therein.

24. On July 23, 1998, defendants caused Leasing Solutions to issue a press release announcing the Company's results of operations for the second quarter of fiscal 1998, ended June 30, 1998. The press release noted that Leasing Solutions had reported record revenue and net income for the quarter and quoted defendant Krauter as stating: "We are very pleased with our second quarter performance. Revenues and lease volume were at an all time high for the period."

25. This announcement was false and misleading because it omitted to disclose that the Company's growth and performance was then being adversely affected by extraordinary decreases in the price of equipment being leased by Leasing Solutions. This announcement, three weeks into the third quarter of 1998, failed to disclose that the Company would be adversely affected by these price decreases and that this would have a significant material negative impact on the Company's results of operations in the third and fourth quarters of fiscal 1998.

26. The July 23, 1998 announcement caused the price of Leasing Solutions common stock to increase to a Class Period high of more than $31 per share. Leasing Solutions' convertible notes increased to more than $109 each.

27. In the weeks following the July 23, 1998 announcement, the price of Leasing Solutions common stock began to decrease. In order to reverse this trend, on September 2, 1998, defendants caused Leasing Solutions to issue a press release announcing that the Company was extending its stock repurchase program. In that announcement, defendant Krauter stated that:

"We believe in the underlying strengths of the company and continue to be comfortable with analysts [sic] expectations of our growth and earnings. Accordingly, we believe our stock is substantially underpriced. As a result, the repurchase program is an excellent opportunity to enhance shareholder value."

28. Leasing Solutions common stock, which had been trading at approximately $22 per share at the time of this announcement, soared to a high of more than $28 per share in the weeks following this bullish announcement.

29. During the morning of October 7, 1998, the price of Leasing Solutions common stock declined from $24.625 to $16.50 per share. In response to this significant decline in the price of Leasing Solutions common stock, defendants caused the Company to issue a press release on the afternoon of October 7, 1998 stating that Leasing Solutions' management was "not aware of any company-specific reasons for this decline." Defendant Krauter stated that "[o]ur third quarter ended September 30, 1998, is now completed, and we are comfortable with the consensus earnings per share forecasted by research analysts for the quarter." Defendant Yeffa noted that "the recent tightness in the asset-backed securitization markets has not adversely affected Leasing Solutions." Defendant Yeffa went on to state that "'[t]he Company will be announcing shortly the details of a securitization treated as a financing, rather than as a sale, closed last week. The securitization involved notes with a principal balance of in excess of $100,000,000, with a blended rate of 5.63%.'"

30. On October 8, 1998, defendants caused Leasing Solutions to issue a press release announcing that the Company had completed the private sale of $123 million of equipment asset-backed Class A notes through a wholly-owned subsidiary of Leasing Solutions.

31. Defendants' false and misleading statements caused Leasing Solutions' stock price to increase dramatically. In the days following the October 7 and 8, 1998 press releases, Leasing Solutions common stock increased from $15 to more than $20 per share.

32. Then, on October 21, 1998, just two weeks after defendants confirmed that the results for the third quarter were in and that the Company had met analysts' expectations, Leasing Solutions issued a press release announcing that earnings per share would be substantially less than analysts' consensus expectations for the quarter. The Company further revealed that its third quarter results, originally scheduled to be released on October 22, would be delayed until the first week of November. The Company did not reveal the reasons for the delay and defendants subsequently refused to comment on the delay. In response to this disclosure, which directly contradicted statements made by defendants just two weeks earlier, Leasing Solutions common stock fell by 54% in one day of trading, falling from $19.56 to $9.625 on volume of approximately 3.1 million shares. However, this was only a partial disclosure of the truth and Leasing Solutions common stock and convertible notes continued to trade at artificially inflated prices.

33. On November 9, 1998, after the close of the market, defendants shocked the market with their announcement that contrary to all prior representations, Leasing Solutions would report a huge loss per share for the third quarter of 1998. The Company announced a $2.9 million loss for the quarter ($.35 per share loss) due to non-cash adjustments of approximately $6.3 million in the quarter. The Company further announced that based on the effect of recent changes in its treatment of short-term leases, it would be at or about break-even for the fourth quarter of 1998. Finally, the Company announced that defendant Yeffa had resigned as Executive Vice President and Chief Financial Officer of Leasing Solutions. As a result of these shocking disclosure, Leasing Solutions common stock price, which had traded at above $10 per share in the days following the October 21, 1998 announcement, dropped to as low as $7-1/2 per share. Leasing Solutions' convertible notes declined to below $41, versus the $56 range the notes traded at after the October 21, 1998 announcment.

34. The statutory safe harbor providing for forward-looking statements under certain circumstances does not apply to the allegedly false statements pleaded in the Complaint. The statements pleaded herein misrepresent existing historical fact and are not forward-looking. Further, even if the statements pleaded herein were forward-looking, they were not identified as a "forward-looking statement" when made. Nor did meaningful cautionary statements identifying important factors that could cause actual results to differ materially from that in the forward-looking statement accompany such statements. To the extent that the statutory safe harbor might otherwise apply to any statement pleaded in the Complaint, the defendants are liable for those false forward-looking statements because at the time of each of those statements was made the speaker actually knew the statement was false and the statement was made, authorized and/or approved by an executive officer of Leasing Solutions who actually knew that those statements were false when made.

35. Plaintiff repeats and realleges each and every allegation above as if fully set forth herein.

36. Throughout the Class Period, the defendants, singly and in concert, directly or indirectly, engaged in a common plan, scheme and course of business described herein, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices and a course of business which operated as a fraud upon plaintiff and the other members of the Class; made various false statements of material facts and omitted to state material facts necessary to make the statements made, in light of the circumstances in which they were made, not misleading; and employed manipulative or deceptive devices and contrivances in connection with the purchase and sale of Leasing Solutions common stock and convertible notes.

37. The purpose and effect of the defendants' plan, scheme and course of business was to artificially inflate and maintain the market price of Leasing Solutions common stock.

38. The Individual Defendants, as senior officers and/or directors of Leasing Solutions, had actual knowledge of the material omissions and/or the falsity of the material statements set forth above, and intended to deceive plaintiff and the other members of the Class, or, in the alternative, acted with reckless disregard for the truth when they failed to ascertain and disclose the true facts in the statements made by them or other Leasing Solutions personnel to the SEC, plaintiff and other members of the Class.

39. Leasing Solutions had actual knowledge of the material omissions and/or the falsity of material statements set forth above, and intended to deceive plaintiff and the other members of the Class, or, in the alternative, acted with reckless disregard for the truth when it failed or refused to ascertain and disclose the true facts to the SEC, plaintiff, and the other members of the Class.

40. As a result of the foregoing, the market price of Leasing Solutions convertible notes was artificially inflated during the Class Period. In ignorance of the falsity of the reports and statements, and the deceptive and manipulative devices and contrivances employed by the defendants, plaintiff and the other members of the Class relied, to their damage, on the reports and statements described above and/or the integrity of the market price of Leasing Solutions convertible notes during the Class Period in purchasing Leasing Solutions convertible notes at prices which were artificially inflated as a result of the defendants' false and misleading statements.

41. Had plaintiff and the other members of the Class known of the material adverse information which the defendants failed to disclose, they would not have purchased Leasing Solutions convertible notes at the artificially inflated prices that they did.

42. The defendants' concealment of this material information served only to harm plaintiff and the other members of the Class who purchased Leasing Solutions convertible notes in ignorance of the financial risk to them as a result of such material misrepresentations and nondisclosures.

43. As a result of the wrongful conduct alleged herein, plaintiff and other members of the Class have suffered damages in an amount to be established at trial.

44. By reason of the foregoing, the defendants have violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and are liable to plaintiff and the other members of the Class for the substantial damages which they suffered in connection with their purchase of Leasing Solutions convertible notes during the Class Period.

45. Plaintiff repeats and realleges each and every allegation above as if fully set forth herein.

46. During the Class Period, the Individual Defendants, by virtue of their positions as officers and/or directors of Leasing Solutions and their specific acts, were controlling persons of Leasing Solutions within the meaning of §20(a) of the Exchange Act.

47. Each of the Individual Defendants' positions made them privy to, and provided them with actual knowledge of, the material facts which Leasing Solutions concealed from plaintiff and the other members of the Class during the Class Period.

48. The Individual Defendants had the power, authority and influence, and exercised the same, to cause Leasing Solutions to engage in the unlawful conduct and practices complained of herein, by causing Leasing Solutions to disseminate the false and misleading information referred to above. Leasing Solutions, in turn, controlled each of the Individual Defendants.

49. By virtue of the foregoing, Leasing Solutions and the Individual Defendants have violated §20(a) of the Exchange Act. As a direct and proximate result of these defendants' wrongful conduct, plaintiff and the other members of the Class suffered damages in connection with their purchase of Leasing Solutions convertible notes during the Class Period.

50. Plaintiff has alleged the foregoing based upon the investigation of his counsel, which included a review of Leasing Solutions' SEC filings, securities analysts' reports and advisories about the Company, press releases issued by the Company, media reports about the Company, private investigations, discussions with consultants, and, pursuant to Rule 11(b)(3), believes that, after reasonable opportunity for discovery, substantial evidentiary support will exist for the allegations set forth herein.

WHEREFORE, plaintiff, on behalf of himself and the other members of the Class, prays for judgment as follows:

1. Declaring this action to be properly maintainable as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure and declaring plaintiff to be a proper class representative;

2. Declaring and determining that the defendants violated the federal securities laws by reason of their conduct as alleged herein;

3. Awarding monetary damages against all of the defendants, jointly and severally, in favor of plaintiff and the other members of the Class for all losses and damages suffered as a result of the acts and transactions complained of herein, together with prejudgment interest from the date of the wrongs to the date of the judgment herein;

4. Awarding plaintiff the costs, expenses and disbursements incurred in this action, including reasonable attorneys' and experts' fees; and

5. Awarding plaintiff and other members of the Class such other and further relief as the Court may deem just and proper.

Plaintiff demands a trial by jury.

CASES\LEASING\LEASING.CP2