Investors suing LV company
A New York law firm filed a class action lawsuit in federal court Friday, seeking unspecified damages for shareholders of Global Cash Access Holdings, a Las Vegas company that provides automated teller machines and cash services to casinos.
The 2005 prospectus for a $225 million initial public offering of Global Cash shares was false or misleading because it didn't disclose that the company was unable to accurately calculate the amount of commissions owed to customers, according to a lawsuit filed by Abraham, Fruchter & Twersky.
The lawsuit also claims that Global Cash improperly calculated commissions and company expenses were understated.
Named as defendants were Global Cash, former CEO Kirk Sanford and two other Global Cash founders, Karim Maskatiya and Robert Cucinotta. Also sued were Summit Partners, a large Global Access shareholder; and two investment banks, Goldman Sach & Co. and J.P. Morgan Securities.
"The company is in receipt of the complaint, and we intend to vigorously defend against it," Katie Lever, general counsel of Global Cash Access, said in a statement.
Sanford retired in November as CEO, having already become special adviser at Xyience, a private company that made energy drinks. Scott Betts replaced Sanford as CEO at Global Access. Sanford also has left Xyience, which is going through Chapter 11 bankruptcy.
Global Cash delayed the filing of its third-quarter financial report with the Securities and Exchange Commission, pending an internal investigations of undisclosed allegations.
In December, however, Global Cash said its audit committee investigated the matter with the help of independent lawyers and "did not uncover any further issues relating to GCA's interpretation of contract clauses related to the calculation of commission."
Global Cash shares fell 51 cents, or 7.69 percent, to close at $6.12 Friday on the New York Stock Exchange.
Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.
