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Shareholders Sue Alliance Gambling
Shares of Alliance Gaming (AGI:NYSE – news –
research) — which have fallen more than 25% since the company issued an
earnings warning last week — were off another 2.6% on Thursday after
two law firms filed class-action lawsuits against the slot-machine
The law offices of Charles Piven, a Maryland firm, and Lerach
Coughlin Stoia & Robbins, a San Diego-based one, separately filed
class-action lawsuits against Alliance in the U.S. District Court of
Nevada, alleging the company issued a series of materially false
statements that artificially inflated its share price. Investors who
held, acquired or sold shares between Jan. 15 and June 7 are eligible to
participate in both lawsuits.
In reaction to the news, shares of Alliance dropped 42 cents to
$15.55, not far from their 52-week-low of $15.21.
The complaint from Lerach Coughlin Stoia & Robbins alleges that
Alliance took advantage of its inflated stock price at the expense of
investors. According to the complaint, the law firm said Alliance
allowed certain executives to sell $3.6 million in shares whose value
had been inflated by misleading public information.
On June 8, Alliance lowered earnings guidance citing delays in
regulatory approval for gaming in New York and California, rising
research and development expenses, and lower yields for some of its
machines. Instead of $1.04 a share, the company said it expected to earn
between 96 cents and $1 a share in 2004 vs. the $1.05 a share expected
by Wall Street. In 2005, Alliance said it expected to earn between $1.20
and $1.30 a share, a far cry from the $1.43 expected by Wall Street.
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