US media company Belo faces a federal lawsuit on behalf of shareholders for enhanced sales claims at its newspaper the Dallas Morning News.
The suit alleges that Belo, its chairman/ceo Robert W Decherd and former evp Barry Peckham violated federal laws by intentionally overstating circulation to inflate financial results and share values.
Decherd and Peckham are also accused of concealing the overstatement by preventing accountants from auditing the figures.
The lawsuit seeks to recover damages for purchasers of Belo stock between 12 May 2003 and 6 August this year, which may amount to hundreds of millions of dollars, according to attorney Darren Robbins who filed the suit.
Robbins, of Schatz & Nobel PC law firm said: "You can't misrepresent a core aspect of your business to induce people to purchase shares."
For the lawsuit to become a class action, it must now be certified by a judge. Class members have until 22 October to join the case.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff