PHILADELPHIA, July 16, 2008 (LAWFUEL) — Offices Bernard M.
Gross, P.C. has commenced a class action lawsuit in the United States
District Court, Western District of Missouri, 08cv514, on behalf of
purchasers of the common stock of FCStone Group, Inc. (Nasdaq:FCSX)
between April 10, 2008 and July 9, 2008, inclusive (the “Class
Period”), pursuing remedies under the federal securities laws. The
action is assigned to Judge John T. Maughmer.
The complaint charges that during the Class Period, defendants
misrepresented material facts concerning the purchase of a hedge
contract, “the LIBOR Hedge,” purportedly aimed at decreasing the
Company’s exposure to declining interest rates. However, the LIBOR
Hedge did not truly hedge against declines in interest rates, but
rather, represented an attempt to inflate FCStone’s earnings by
gambling on the spread between U.S. and U.K. interest rates. The right
“bet” would result in large profits, while the wrong “bet” would result
in serious losses. Investors and securities analysts were not only
unaware of this gamesmanship, but also were affirmatively led to
believe by defendants that the LIBOR Hedge was a mundane instrument
which merely tracked interest rates, and protected the Company in the
current low-interest environment. Analysts questioned the hedge on the
Company’s April 10, 2008 conference call. Unbeknownst to shareholders,
by May 31, 2008, FCStone had “closed out” the LIBOR Hedge, wiping out
FCStone’s $650,000 first quarter gain and $4.4 million second quarter
gain and had incurred a loss on this close out of $3.1 million in the
third quarter. Between April 10, 2008 and July 9, 2008, defendants were
completely silent about the LIBOR Hedge.
On July 10, 2008, FCStone shocked the market by announcing earnings per
share of 28 cents versus the expected 47 cents. Much of the deviation
was due to the decline and sale of the LIBOR Hedge, and the concomitant
losses on that hedge. This revelation was so at odds with what
investors had been led to believe that the resultant stock drop of
$12.26 on July 10, 2008 eradicated $330 million in Company and
shareholder value in one day.
Plaintiff seeks to recover damages on behalf of all those who purchased
FCStone common stock between April 10, 2008 and July 9, 2008. The
plaintiff is represented by Law Offices Bernard M. Gross, P.C. The firm
has expertise in prosecuting investor class actions and extensive
experience in actions involving financial fraud. If you wish to serve
as lead plaintiff, you must move the Court no later than September 15,
2008. Any member of the purported class may move the Court to serve as
lead plaintiff through counsel of their choice, or may choose to do
nothing and remain an absent class member.
