PHILADELPHIA, July 16, 2008 (PRIME NEWSWIRE) -- Offices Bernard M. Gross, P.C. has commenced a class action lawsuit in the United States District Court, Western District of Missouri, 08cv514, on behalf of purchasers of the common stock of FCStone Group, Inc. (Nasdaq:FCSX) between April 10, 2008 and July 9, 2008, inclusive (the "Class Period"), pursuing remedies under the federal securities laws. The action is assigned to Judge John T. Maughmer.
The complaint charges that during the Class Period, defendants misrepresented material facts concerning the purchase of a hedge contract, "the LIBOR Hedge," purportedly aimed at decreasing the Company's exposure to declining interest rates. However, the LIBOR Hedge did not truly hedge against declines in interest rates, but rather, represented an attempt to inflate FCStone's earnings by gambling on the spread between U.S. and U.K. interest rates. The right "bet" would result in large profits, while the wrong "bet" would result in serious losses. Investors and securities analysts were not only unaware of this gamesmanship, but also were affirmatively led to believe by defendants that the LIBOR Hedge was a mundane instrument which merely tracked interest rates, and protected the Company in the current low-interest environment. Analysts questioned the hedge on the Company's April 10, 2008 conference call. Unbeknownst to shareholders, by May 31, 2008, FCStone had "closed out" the LIBOR Hedge, wiping out FCStone's $650,000 first quarter gain and $4.4 million second quarter gain and had incurred a loss on this close out of $3.1 million in the third quarter. Between April 10, 2008 and July 9, 2008, defendants were completely silent about the LIBOR Hedge.
On July 10, 2008, FCStone shocked the market by announcing earnings per share of 28 cents versus the expected 47 cents. Much of the deviation was due to the decline and sale of the LIBOR Hedge, and the concomitant losses on that hedge. This revelation was so at odds with what investors had been led to believe that the resultant stock drop of $12.26 on July 10, 2008 eradicated $330 million in Company and shareholder value in one day.
Plaintiff seeks to recover damages on behalf of all those who purchased FCStone common stock between April 10, 2008 and July 9, 2008. The plaintiff is represented by Law Offices Bernard M. Gross, P.C. The firm has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. If you wish to serve as lead plaintiff, you must move the Court no later than September 15, 2008. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.