Monday, June 30, 2008

First American Corporation - Class Actions - Galore!

Numerous class action lawsuits in various States across the US have been filed this month against The First American Corporation – NYSE: FAF.

One of the latest suits was filed by Grant & Eisenhofer, P.A., ) in the United States District Court for the Southern District of New York, on behalf of shareholders who purchased the common stock of the Company between April 26, 2006 and November 6, 2007, inclusive ("Class Period").

The Complaint alleges that, during the Class Period, First American and certain of the Company's officers and directors engaged in an illegal scheme. During the Class Period, in quarterly earnings reports, the Company's management reported increased earnings and reassured investors that internal controls were adequate.
The Complaint further claims that First American overstated its gross profit margins and net income during the Class Period and that throughout the Class Period the defendants made false and misleading statements regarding the Company's internal controls and financial performance.
The defendants are First American, Parker S. Kennedy, the Company's Chief Executive Office and Chairman of the Board, and Fred F. McMahon, the Company's Vice Chairman and Chief Financial Officer. That case is captioned Berks County Employees' Retirement Fund v. First American Corporation.

This is nothing new! It is only one more example of a well established, long enduring systemic approach by senior executives of First American to deliberately deceive investors. How often has First American resorted to creative accounting to overstate figures, inflate stock value and defraud investors in the past? How often has Parker S. Kennedy pumped up the stock through outrageous false and misleading statements in the past?

As an example, a quick review of history reveals that at a shareholders’ meeting held in Santa Ana, California on April 22, 1999, Parker S. Kennedy conceded that the recently, Fed ordered, accounting change had affected the stock price negatively. (Note: After investigation, the Fed had concluded that First American had used creative accounting to overstate its earnings and thus inflate its stock price. As a result of its findings, The Fed forced First American to restate its earnings.)
Unfortunately, no class action suit was filed then!
In the absence of meaningful fines or suits, Parker S. Kennedy was emboldened to blurt out a most deceitful statement at that same meeting on April 22, 1999. Without any authorization from the board, Parker S. Kennedy guaranteed to investors that the corporation would increase its dividend before 1999 year end. Foreseeing an improved return on capital, investors sent the stock momentarily skyrocketing days after Kennedy made that unauthorized and most misleading statement! Sadly the ‘GUARANTEED’ dividend increase for year 1999 never materialized and the stock plummeted!

Unfortunately, once again, no class action was filed!

IMHO, the series of class actions being filed lately against First American and its senior execs are long overdue!

I wish well to all attorney firms who have filed class actions against The First American Corporation. I stand ready to voluntarily assist them with any critical info that I am privy to. I can be contacted at: leclezio@hotmail.com or a comment can be left on my blog: www.lleclezio.blogspot.com

Note: I have an irrefutable audio tape of numerous past statements made by Kennedy. IMHO those statements establish deep rooted intent concerning the deliberate manipulation of the First American stock price by Kennedy and his gang.

Furthermore, it is noteworthy that my book ‘First American Title To Injustice’ has been made an exhibit in The Massachusetts Federal Court. Many revealing statements can be found in my book.

IMHO, the key to understanding the First American overt deplorable modus operandi over the years rests in the statement made in a letter addressed to me by ex First American senior executive, James J. Dufficy: “The company has no duty vis-à-vis the public to do the correct thing”.
That says it all!