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Acclaim Entertainment Inc. Securities Litigation
Acclaim Entertainment Inc.,


The action is brought on behalf of public investors who purchased securities of Acclaim Entertainment, Inc. from January 22, 2002 to September 19, 2002. Acclaim is a developer of interactive entertainment software. The complaint alleges that Acclaim and the Company’s COO and CFO violated section 10(b) and 20(a) of the Securities Exchange Act of 1934 and S.E.C. Rule 10b-5. The complaint alleges that during the Class Period, defendants improperly capitalized software development costs and overstated earnings by recording declining allowances for returns and price concessions and by failing to write down receivables despite deteriorating customer quality and increasingly delinquent accounts receivable. These materially false and misleading statements caused Acclaim's shares to trade at artificially inflated levels and, as a result of this inflation, Acclaim was able to complete a private placement offering raising net proceeds of $21.5 million on April 11, 2002. On September 19, 2002, just months after the offering was completed, Acclaim revealed that the Company’s first- and second-quarter fiscal 2002 results, as well as its 2003 projections, were false when issued, causing Acclaim stock to drop below $1 per share, from a Class Period high of $5.85.
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