The New York law firm of Wechsler Harwood Halebian & Feffer announced that it has filed a class action lawsuit in Federal Court in Illinois on behalf of shareholders against Aon Corp., following revelations of misstatements in the company’s earnings reports.
The news follows two similar actions filed last week by law firms in Arkansas and Florida (See IJ Website August 19), and contains similar allegations, based on violations of Rules 10(b) and 20(a) of the Securities and Exchange Act, which affirm the right of a purchaser of securities to file an action for damages if there are grounds for affirming that the decision was based on a “material misrepresentation.”
Aon’s acknowledgment that it overstated earnings, and its agreement with the Securities and Exchange Commission to restate them for the years 1999-2002, has opened the world’s second largest insurance broker up to a series of such civil suits.
Wechsler Harwood’s announcement indicated that the legal basis for the suit was Aon’s issuance of “a series of material misrepresentations to the market between May 4, 1999 and August 6, 2002, thereby artificially inflating the price of Aon securities.”
It gave further details as follows: “Throughout the Class Period, as alleged in the complaint, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company’s earnings and financial performance. The complaint alleges that these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had materially overstated its net income by $27 million in 1999, $24 million in 2000, and $5 million in the first quarter of 2002; (ii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iii) that as a result, the value of the Company’s net income and financial results were materially overstated at all relevant times.”