The law firm of Schiffrin & Barroway L.L.P. filed a class-action lawsuit on behalf of securities purchasers of Sprint PCS affiliate US Unwired Inc. in the U.S. District Court for the District of Louisiana. The lawsuit claims the carrier failed to disclose and misrepresented financial and operational information related to its previously offered Clear Pay automatic spending limit service, which impacted the carrier’s stock price.
Specifically, the lawsuit alleges US Unwired rapidly increased its subscriber base by signing high-risk customers and implemented accounting changes to conceal its declining revenues. The lawsuit also says US Unwired had experienced high involuntary customer churn related to its high-risk customers, and a change in its credit policies then produced a negative impact on customer growth. In addition, US Unwired was engaged in a dispute with Sprint PCS regarding its business relationship and Sprint PCS was in turn pressuring US Unwired’s operations, according to the lawsuit.
The lawsuit cites US Unwired’s second-quarter 2002 financial results, where the carrier said it had experienced lower subscriber growth due to the implementation of a deposit requirement for credit-challenged customers. Following the second-quarter announcement, US Unwired’s stock closed at 90 cents per share, which was a 94.8-percent drop from its $17.25 per share high, according to the lawsuit.
