Homestore Shareholders File Class-Action Lawsuit

Lawyers representing shareholders of Homestore.com Inc. on Thursday said they had filed a class-action lawsuit claiming that the Internet’s largest residential real estate site and its top executives violated federal securities laws by misrepresenting financial data and concealing “improper acts.”

The suit, filed in U.S. District Court in Central California, charged the Westlake, Calif.-based Homestore.com with misstating the firm’s prospects and overstating revenue and assets in order to boost the value of Homestore.com stock. The defendants, including Homestore.com Chairman and Chief Executive Stuart H. Wolff, were able to sell at least $27.9 million worth of their own shares as a result, according to the suit.

A Homestore.com spokesman said the firm had not seen the lawsuit and declined to comment.

The lawsuit is part of the fallout after the company’s announcement last week that it would restate certain financial statements as part of an investigation of its accounting practices by the board of directors’ audit committee. Shortly after that, officials at Nasdaq suspended trading in Homestore.com shares after the exchange requested information from the firm. On Thursday, trading in Homestore.com shares remained suspended.

Earlier this month, Homestore.com said Chief Financial Officer Joseph Shew resigned for personal reasons.

The lawsuit filed against Homestore.com applies to all who purchased shares between July 20, 2000, and Dec. 21, 2001.