BALA CYNWYD, Pa., Aug. 29, 2002 (PRIMEZONE) -- A pending class action charges American Express Co. ("American Express" or the "Company") (NYSE:AXP) with misleading investors about its business and financial condition according to the law firm of Schiffrin & Barroway, LLP.
The complaint was filed in the U.S. District Court for the Southern District of New York. Plaintiff seeks damages for violations of the federal securities laws on behalf of all investors who purchased American Express Co. securities between July 26, 1999 and July 17, 2001(the "Class Period").
Schiffrin & Barroway, LLP has prosecuted shareholder class actions for over fourteen years and has recovered more than $1 billion for investors. If you are a shareholder of American Express Co. and want to learn more about this lawsuit and about becoming a lead plaintiff, you may visit our website at http://www.sbclasslaw.com/cgi/signup.cgi.
The complaint alleges that American Express Co. issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's increasing earnings and financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that American Express had made disproportionately large investments in certain speculative high-yield securities. Indeed, in 1997 and 1998, the Company increased its investments in high-yield securities to 10-12% of its portfolio of investments, well beyond the industry norm of 7%; (ii) that the Company's increased investments in certain speculative high-yield securities exposed the Company's investment portfolio to substantial risk in the event default rates in the junk bond market increased; (iii) that the Company lacked the internal controls necessary to monitor its portfolio of high-yield securities such that it was unable to take decisive action should its investments turn against it; and (iv) that as a result of the foregoing, defendants' statements concerning the Company's financial performance and future prospects were materially false and misleading at all relevant times.
On July 18, 2001, before the market opened for trading, American Express issued a press release announcing that its earnings for the second quarter of 2001, the period ending June 30, 2001, would most likely decline 76% from its earnings in the same period of the prior year, in part, because of an $826 million pre-tax charge to recognize "additional write-downs in the high-yield portfolio at American Express Financial Advisors (AEFA) and losses associated with rebalancing the portfolio towards lower-risk securities." In a conference call following this announcement, defendant Chenault explained that the Company had increased its investments in high-risk junk bonds in 1997 and 1998 to between 10% and 12% of its portfolio and would now be scaling it back to 7%, which is the industry average.
If you purchased American Express Co. securities between July 26, 1999 and July 17, 2001, you may be a member of the class and have until September 16, 2002 to move the court to become a lead plaintiff. In order to serve as lead plaintiff, however, you must meet certain legal requirements. To be a member of the class, however, you do not need to take any action at this time. Should you decide to seek appointment as a lead plaintiff, you may retain Schiffrin & Barroway, or retain counsel of your choice.
To learn more about your rights and interests in this case and your ability to potentially recoup your losses, please contact Schiffrin & Barroway (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) directly at 888-299-7706 (toll free) or 610-822-2221, fax number 610-822-0002, e-mail at info@sbclasslaw.com or visit our website at www.sbclasslaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.