Suit Says Comcast, Cox Left Contracts
Comcast Corp. and Cox Communications Inc. were accused in a lawsuit by At Home Corp.’s bondholders of making at least $603.7 million in illegal profit while forcing the Internet-access provider into insolvency.
At Home, which offered Internet service over cable lines, filed for bankruptcy protection in September 2001, ceased operations in February and liquidated its assets. The company once had a $16.5-billion market value. AT&T; Corp., Cox and Comcast controlled At Home until March 2000, when AT&T; agreed to buy a majority stake in the Redwood City, Calif.-based company.
At Home’s bondholders, in the suit filed Tuesday in U.S. District Court in Delaware, allege that Cox and Comcast forced At Home into various agreements that left it “critically weakened.” The deals let Cox and Comcast end their roles as At Home’s major customers, while handing AT&T; control, the suit said.
“The March 2000 transactions effectively destroyed any long-term value of At Home” by permitting Cox and Comcast to escape contracts requiring them to exclusively use At Home’s service, the bondholders say in their suit.
In June 2000, Cox and Comcast exercised stock options received as part of the deal, selling their At Home shares to AT&T; in exchange for about $3.4 billion worth of AT&T; shares, the lawsuit said.
Cox and Comcast have said they made a total of $600 million selling At Home shares and it is probable their “short-swing profits far exceeded” that total, the lawsuit said. Under federal securities laws, any short-swing profits from insider trades would have to be returned to At Home.
Comcast and Cox declined to comment. A lawyer for At Home bondholders declined to comment.
Brian L. Roberts, Comcast’s president, and David Woodrow, a senior vice president at Cox, also were named in the suit.
The lawsuit asks for a jury trial, the return of at least $600 million to At Home’s creditors, and an award of unspecified damages for violations of duties to investors.
Suit Against Union
Bank Dismissed
A suit that alleged Union Bank helped Reed Slatkin defraud investors has been dismissed, although a similar lawsuit is still pending against the bank.
U.S. District Judge Margaret Morrow in Los Angeles granted the bank’s request to dismiss the suit, which was filed by victims of a multimillion-dollar Ponzi scheme run by Slatkin. The suit claimed Union Bank knowingly helped the scheme by providing Slatkin with credit, allowing him to commingle personal and investor funds and lending its name and prestige to his operations.
Union Bank, a unit of UnionBanCal Corp., faces another suit, filed this month by the bankruptcy trustee for Slatkin’s estate, that makes similar allegations. That suit also named Comerica Inc. as a defendant.
The investors “have failed to allege that Union Bank was a fiduciary and that it had a duty to disclose Slatkin’s fraudulent scheme to them,” Morrow wrote in an 18-page opinion.
SEC Says Oxford Capital
Falsified Performance
A Maryland investment-advisory firm gained a ranking as one of the top 20 U.S. money managers the last four years by exaggerating its stock-picking performance, the Securities and Exchange Commission alleged Tuesday.
The SEC charged Oxford Capital Management Inc. with civil fraud for allegedly submitting false performance numbers to the Nelson Investment Manager Database, which ranked Oxford’s composite stock funds among its top 20 from 1998 to September 2001.
Oxford and its majority shareholder, John Danz, who also was charged, are contesting the SEC allegations, the SEC said. Oxford, which manages about $134 million, represented its 10-year annualized return as 23.4% when it actually was 15.7%, the SEC said.
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