Case Page

 

Case Status:    SETTLED
On or around 01/02/2002 (Date of order of final judgment)

Filing Date: May 30, 2000

According to the Company’s FORM 10-K for the fiscal year ended December 31, 2001, the Company has settled the securities class action lawsuit originally filed in 2000 in the U.S. District Court for the Northern District of Illinois, Eastern Division under the caption Market Street Securities, Inc., et al. v. Racing Champions Corporation, et al. Pursuant to the settlement, the Company made a $1.8 million payment, which was covered by insurance. The Company incurred legal expenses of approximately $1.0 million in connection with this lawsuit that were not covered by insurance.

As reported in an earlier FORM 10-K for the fiscal year ended December 31, 2000, the Company is a defendant in a class action lawsuit in the U.S. District Court for the Northern District of Illinois, Eastern Division under the caption Market Street Securities, Inc., et al. v. Racing Champions Corporation, et al. The lawsuit was filed by, and on behalf of, purchasers of the common stock of the Company between February 1, 1999 and June 23, 1999. The complaint alleges that the Company violated certain federal securities laws by issuing a series of material misrepresentations to the market between February 1, 1999 and June 23, 1999, thereby artificially inflating the price of the Company's common stock. The complaint seeks, among other things, an unspecified amount of compensatory damages and trial costs and expenses. The defendants filed a motion to dismiss all claims on October 16, 2000. After the court denied the defendants' motion to dismiss, the Company filed an answer and affirmative defenses on December 18, 2000. On December 20, 2000, the court entered an order for conditional class certification.

The original 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 material misrepresentations to the market thereby artificially inflating the price of Racing Champions common stock. Specifically, as alleged in the complaint, on February 23, 1999, the Company reported seemingly record earnings for its 1998 fiscal year, and represented that the Company would continue to experience growth in 1999. These statements were materially false and misleading when made because defendants did not disclose, and knew or recklessly disregarded, that the Company's sales were then being negatively impacted by the competition from Star Wars related merchandise and as a result, sales of the Company's products were declining significantly. When Racing Champions revealed, on June 23, 1999, that it was expecting a per share loss of $0.30 to $0.35 for its second fiscal quarter of 1999, Racing Champions common stock dropped by 60%. Defendants attributed the loss to poor sales, and the taking of a $6.4 million restructuring charge in connection with a corporate acquisition.

COMPANY INFORMATION:

Sector: Consumer Cyclical
Industry: Recreational Products
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: RACN
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. Illinois
DOCKET #: 00-CV-3267
JUDGE: Hon. Suzanne B. Conlon
DATE FILED: 05/30/2000
CLASS PERIOD START: 02/01/1999
CLASS PERIOD END: 06/23/1999
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Cauley, Geller, Bowman, Coates & Rudman LLP (San Diego, CA)
    225 Broadway, Suite 1900, Cauley, Geller, Bowman, Coates & Rudman LLP (San Diego, CA), CA 92010
    619.702.7350 619.702.7351 ·
  2. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  3. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
  4. Stull, Stull & Brody (New York)
    6 East 45th Street, Stull, Stull & Brody (New York), NY 10017
    310.209.2468 310.209.2087 · SSBNY@aol.com
  5. Weiss & Yourman (New York, NY)
    The French Building, 551 Fifth Ave., Suite 1600, Weiss & Yourman (New York, NY), NY 10126
    212.682.3025 212.682.3010 · info@wyca.com
  6. Wolf Haldenstein Adler Freeman & Herz LLP (New York)
    270 Madison Avenue, Wolf Haldenstein Adler Freeman & Herz LLP (New York), NY 10016
    212.545.4600 212.686.0114 · newyork@whafh.com
No Document Title Filing Date
COURT: N.D. Illinois
DOCKET #: 00-CV-3267
JUDGE: Hon. Suzanne B. Conlon
DATE FILED: 09/05/2000
CLASS PERIOD START: 02/01/1999
CLASS PERIOD END: 06/23/1999
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA)
    600 West Broadway, 1800 One America Plaza, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA), CA 92101
    800.449.4900 · support@milberg.com
  2. Miller Faucher and Cafferty LLP
    30 North LaSalle Street, Miller Faucher and Cafferty LLP, IL 60602
    312.782.4880 ·
  3. Stull, Stull & Brody (New York)
    6 East 45th Street, Stull, Stull & Brody (New York), NY 10017
    310.209.2468 310.209.2087 · SSBNY@aol.com
No Document Title Filing Date