Gold Bennett Cera & Sidener LLP Announces Class Action Lawsuit Against Legato Systems, Inc.

Feb 01, 2000, 00:00 ET from Gold Bennett Cera & Sidener LLP

    SAN FRANCISCO, Feb. 1 /PRNewswire/ -- Gold Bennett Cera & Sidener LLP
 announced today that it had filed a class action in the United States District
 Court for the Northern District of California on behalf of purchasers of
 Legato Systems, Inc. ("Legato") (Nasdaq:   LGTO) common stock during the period
 between October 21, 1999 and January 19, 2000 (the "Class Period"), Case
 Number C-00-0365-CRB. Plaintiff seeks to recover damages on behalf of all
 purchasers of Legato common stock during the Class Period (the "Class").
     The plaintiff, who suffered losses of approximately a million dollars, is
 represented by the San Francisco law firm of Gold Bennett Cera & Sidener LLP.
 For over 30 years, Gold Bennett Cera & Sidener LLP and its predecessors have
 successfully engaged in complex commercial litigation, including shareholder,
 consumer and antitrust class actions, in federal and state courts throughout
 the United States, recovering hundreds of millions of dollars for its clients.
     The complaint charges Legato and certain of its officers and directors
 (Louis C. Cole, Kent D. Smith, Stephen C. Wise, Nora M. Denzel,
 Phillip E. White) with violations of the Securities Exchange Act of 1934 by
 making material misrepresentations in Legato's financial statements and other
 false statements regarding its earnings growth. During the Class Period,
 certain of the individual defendants who controlled and were senior officers
 of Legato are alleged to have engaged in the scheme to conceal Legato's
 flagging growth to prevent the decline in the price of Legato stock in order
 to:  (i) use Legato's artificially inflated stock as "currency" to fund the
 Company's acquisition of companies in stock-for-stock transactions; and
 (ii) receive $12.1 million in insider trading proceeds.
     The Complaint alleges that, during the Class Period, Legato portrayed
 itself as a highly successful company with a leading position in the
 fast-growing enterprise storage and recovery software market. Because Legato
 consistently reported revenues and earnings which exceeded Wall Street
 estimates, its stock price rose dramatically, commensurate with the optimistic
 expectations created by defendants' bullish statements to analysts concerning
 Legato's prospects for continued high growth.
     On January 19, 2000, however, Legato shocked the market by announcing that
 it would restate its 1999 third quarter financial results. Specifically, its
 auditors took issue with Legato's attempts to accelerate the recognition of
 licensing revenues on certain long-term contracts, forcing the Company instead
 to book the revenues over a period of several quarters, as required by
 Generally Accepted Accounting Principles. As a result of the changes to its
 revenue recognition practices, Legato was forced to restate its third quarter
 results and to revise downward its sales growth for 2000. The following day,
 the price of Legato stock collapsed, dropping to $29.75 per share, a one-day
 decline of more than 44.5%.
     If you are a member of the Class described above, you may, no later than
 March 20, 2000, move the Court to serve as lead plaintiff of the Class, if you
 so choose. In order to serve as lead plaintiff, however, you must meet certain
 legal requirements. If you wish to discuss this action or have any questions
 concerning this case or your rights or interests, please contact
 Joseph M. Barton, Esq. of Gold Bennett Cera & Sidener LLP, 595 Market Street,
 Suite 2300, San Francisco, California 94105, by telephone at 800-778-1822 or
 415-777-2230, by facsimile at 415-777-5189 or by e-mail at

SOURCE Gold Bennett Cera & Sidener LLP