The lawsuit against locally based Homestore.com was filed yesterday in the US District Court of Central California by lawyers representing some investors in Homestore.com's stock. The stock, which traded as high as $37.25 a share in the past year, was selling for about $3.50 before the Nasdaq exchange halted trading in its securities after last Friday's closing bell pending receipt of more information about the company's plans to restate earnings.
The complaint alleges that Homestore.com Chairman and CEO Stuart H. Wolff, EVP of Business Development and Sales Peter B. Tafeen and former CFO Joseph J. Shew "misrepresented Homestore's true prospects in an effort to conceal Homestore's improper acts until they were able to sell $27.9 million worth of their own Homestore stock." It also alleges that the company entered into several questionable transactions to inflate its earnings in the first three quarters of last year and the first three quarters of 2001.
Shew resigned from his post earlier this month for what he and the company said were personal reasons. He had taken the job in February.
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