United States District Court, D. New Jersey
JAMES CHRISTIAN, Individually and on behalf of all others similarly situated, Plaintiff,
BT GROUP PLC, GAVIN PETERSON, IAN LIVINGSTON, and TONY CHANMUGAM, Defendants.
MCNULTY UNITED STATES DISTRICT JUDGE.
the Court in this putative federal securities class action
are competing motions of
group of individual plaintiffs consisting of Gary Classen,
Alice Korenblat, Robert Korenblat, and Pierre-S. Lefebvre
(collectively, the "Classen Plaintiffs") (ECF No.
plaintiff PAMCAH-UA Local 675 Pension Fund (the "Pension
Fund") (ECF No. 10).
seeks appointment as lead plaintiff and appointment of its
counsel as lead counsel.
underlying securities class action is brought on behalf of
purchasers of the securities of defendant BT Group PLC
("BT Group") between May 24, 2012 and January 23,
2017 (the "Class Period"). The plaintiffs allege
violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and
78t(a), as amended by the Private Securities Litigation
Reform Act of 1995 (the "PSLRA"), 15 U.S.C. §
78u-4, et seq., and of the Securities and Exchange
Commission (the "SEC") Rule 10b-5 promulgated
thereunder, 17 C.F.R. §§240.10b-5.
Group is a communications services company whose securities
are publicly traded on the New York Stock Exchange
("NYSE"). Named plaintiff James Christian, on
behalf of a putative class, alleges that from 2012 through
2016 BT Group issued annual reports that summarized balance
sheets of company operations. Those annual reports stated
that the company maintained adequate internal controls over
its financial reporting. Those reports also contained
Sarbanes-Oxley Act ("SOX") certifications
"attesting to the accuracy of the financial statements,
the disclosure of any material changes to the Company's
internal controls over financial reporting and the disclosure
of all fraud." (Compl. ¶¶ 16-30)
plaintiffs allege that statements made in BT Group's
2012-16 annual reports were materially false or misleading
because they failed to disclose adverse facts known to or
recklessly disregarded by BT Group and its officers at the
time. More specifically, the plaintiffs allege that BT
Group's 2012-16 annual reports misstated earnings, failed
to disclose improper accounting practices, sales, and
transactions in BT Group's Italian operations, and failed
to disclose that BT Group's internal controls were
ineffective. (Compl. ¶ 31). The plaintiffs say these
truths first emerged through two press releases published in
BT Group's First Corrective Disclosure
the plaintiffs cite an October 27, 2016 press release which
announced BT Group's results for the second quarter and
half year to September 30, 2016. That press release revealed
a write-down of the value of items on its balance sheet by
£145 million. The press release stated, in part:
Specific items Specific items resulted in a net charge after
tax of £151m (Q2 2015/16: £52m charge). See Note
4 for a breakdown.
BT Italia investigation Following allegations of
inappropriate management behaviour in our BT Italia
operations, we have conducted an initial internal
investigation. This included a review of accounting practices
during which we have identified certain historical accounting
errors and reassessed certain areas of management
We have written down the value of items on the
balance sheet by £145m.
This is our current best estimate of the financial impact
based on our internal investigation. The write down relates
to balances that have built up over a number of years and our
assessment is that the errors have not materially impacted
the group's reported earnings over the previous two
years. The amount has been charged as a specific item in our
results for the quarter. As a non-cash item in the period it
does not impact normalised free cash flow.
A full investigation of these matters is ongoing and we have
appointed external advisers to assist with this. Appropriate
action will be taken as the investigation progresses.
Our outlook is not affected.
(Compl. ¶ 32 (emphasis in Complaint)).
this press release, shares of BT Group fell $0.57 per share,
representing a 2.39% drop from its previous closing price of
$23.25 on October 27, 2016. (Id. ¶ 33; IM Opp.
BT Group's Second Corrective Disclosure
on January 24, 2017, BT Group issued a press release
announcing an update on its investigation into its Italian