BALA CYNWYD, Pa., March 1, 2002 (PRIMEZONE) -- Shareholders of Rhythms NetConnections, Inc. (Nasdaq:RTHMQ) who desire to serve as a lead plaintiff in a shareholder class action lawsuit now pending in federal court in Colorado (02-K-0064) must submit an application with the Court by March 11, 2002 according to the law firm of Schiffrin & Barroway, LLP.
The lawsuit seeks damages for violations of the federal securities laws on behalf of all investors who purchased Rhythms NetConnections, Inc. securities between January 6, 2000 and April 2, 2001 (the "Class Period").
Schiffrin & Barroway, LLP has prosecuted shareholder class actions for over fourteen years and has recovered more than $1 billion for investors. If you are a shareholder of January 6, 2000 and April 2, 2001 and want to learn more about this lawsuit and about becoming a lead plaintiff, you may visit our Website at www.sbclasslaw.com.
The complaint alleges that the Colorado-based Rhythms NetConnections, Inc. portrayed itself as a fast-growing and expanding provider of DSL services and repeatedly represented that it could continue to expand its broadband network throughout the United States and reassured investors that it was financially able to continue this expansion. As alleged in the Complaint, defendants' statements issued throughout the Class Period were materially false and misleading when made as they failed to disclose the following adverse facts which were then known to defendants or recklessly disregarded by them: (I) that Rhythms lacked the financial resources necessary to execute its business plan of a full national network expansion; (ii) that the Company's efforts to scale back its expansion plans were not meeting with success as the Company was unable to generate the necessary financing; (iii) that Rhythms was not well-funded or well-positioned to continue its growth, as the Company's expenses, including its ongoing debt payment obligations, were far outpacing its revenues and rapidly depleting the Company's cash reserves; (iv) that the Company did not have adequate cash reserves and was not sufficiently "stable" and "financially strong" that it would be able to fund Rhythms' operational needs into the first quarter of 2002, as defendants repeatedly promised investors -- defendants were not even able to keep Rhythms running though 2001, as it had earlier guaranteed; and (v) that without the influx of additional capital, Rhythms would be forced to seek bankruptcy protection, which would render Rhythms common stock worthless. While in possession of the true facts about Rhythms and its business, the Individual Defendants and other Rhythms insiders collectively sold 600,000 shares of Rhythms common stock for gross proceeds in excess of $16 million - of which over $12.6 million alone was received by defendant Hapka - and the Company raised hundreds of millions of dollars in preferred stock sales and debt issuances.
If you purchased January 6, 2000 and April 2, 2001 securities between January 6, 2000 and April 2, 2001, you may be a member of the class and have until March 11, 2002 to move the court to become a lead plaintiff. In order to serve as lead plaintiff, however, you must meet certain legal requirements. To be a member of the class, however, you do not need to take any action at this time. Should you decide to seek appointment as a lead plaintiff, you may retain Schiffrin & Barroway, or retain counsel of your choice.
To learn more about your rights and interests in this case and your ability to potentially recoup your losses, please contact Schiffrin & Barroway (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) directly at 888-299-7706 (toll free) or 610-822-2221, fax number 610-822-0002, e-mail at info@sbclasslaw.com or visit our Website at www.sbclasslaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca