Class Action Lawsuit Filed Against Legg Mason Inc.
A class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of purchasers of Legg Mason, Inc. common stock during the period between June 24, 2005 and July 24, 2006, alleges that on 6/24/05, Legg Mason announced that it would swap its brokerage unit plus $2.1 billion in stock and cash for Citigroup’s $435 billion money-management division and would buy hedge fund firm The Permal Group.
According to the complaint, throughout the Class Period, defendants continued to paint a picture of continued growth and success for the future. In fact, Legg Mason’s business was failing miserably, as: (a) Legg Mason was unable to successfully integrate Citigroup’s worldwide asset management business (”CAM”) assets because of a lack of compatible corporate infrastructures; (b) the Company’s acquisition of the CAM assets was not the success defendants claimed - Citigroup had undisclosed pre-existing sales expenses to a third-party brokers, so there was little or no possibility of achieving the combined (post-acquisition) projections that defendants claimed; (c) post-acquisition cost “savings” were unattainable; (d) former Citigroup customers had withdrawn billions of dollars of assets, further driving down revenues and profits; (e) the Company’s ability to achieve earnings growth (including the Company’s projections for fiscal 2006 and beyond) was severely strained, due to deteriorating investment returns on Bill Miller’s $18.7 billion Legg Mason Value Trust, the Company’s flagship equity fund which was having its worse year since 1990 and was trailing the S&P 500 for the first time in 16 years; and (f) the diminishing returns on Miller’s flagship fund were causing further margin pressure. As a result, the Company’s projections for fiscal years 2006 and 2007 were grossly inflated.
If you wish to serve as lead plaintiff, you must move the Court no later than December 15, 2006.
Filed under Class Action, General Law
