IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DMSION
MASTER FILE
IN RE WASTE MANAGEMENT, INC. : NO. 97 C 7709
SECURITIES LITIGATION
CONSOLIDATED AMENDED COMPLAINT FOR
VIOLATIONS OF THE SECURITIES EXCHANGE ACT OF 1934
Plaintiffs, on behalf of themselves and all others similarly situated, for their
complaint against defendants, allege as follows:
NATURE OF THE ACTION
1. This action is brought on behalf of the plaintiffs and all other
persons, other than defendants and their affiliates, who purchased securities of
defendant Waste Management, Inc. ("Waste Management," "WMX," or "the
Company") during the period from May 29, 1995 through October 30, 1997, inclusive
and who sustained damage as a result of those transactions. During that period, the
defendants, knowingly or recklessly made, caused, or permitted the misrepresentation
and/or omission of material facts necessary to make the statements made not misleading
about the Company's operations, financial position, and financial performance, in
violation of the federal securities laws. As was admitted after October 30, 1997, in
Company press releases, Company filings with the Securities Exchange Commission
("SEC") and financial statements which defendant Arthur Andersen LLP ("Andersen"),
the Company's auditors, opined conformed with generally accepted accounting
principles ("GASP"), for at least eight years, beginning some time before 1991, the
financial statements and financial information that Waste Management reported to
unsuspecting investors were blatantly false. The Company's net income for each and
every year from 1992 through the third quarter of 1997 was overstated in each year by
more than $100 million, with overstatements of net income increasing to $263.8 million
in 1995. These overstatements of income totalled an astounding $1.32 billion. In fact,
from 1994 through the third quarter of 1997, approximately 47 % of the Company's
reported income was fictitious because reported expenses were understated by hundreds
of millions of dollars. In early 1998, the Company issued restated financial statements
for 1991 through 1997 and earlier years, reporting income for the period that was $1.32
billion lower than the income reported during those years, thereby admitting that the
earlier fmancial statements were materially false when they were issued. Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 16,
("FAS 16") ql 1. Accounting Principles Board Opinion No. 9 ("APB 9"), 723.
2. These overstatements of income enabled Waste Management to
conceal the Company's deteriorating financial performance, to create the illusion that
WMX was a growth company with healthy operating profit margins and to maintain the
market price of the Company's stock at lofty and inflated levels. In fact, as late as
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SECURITIES LITIGATION
persons, other than defendants and their affiliates, who purchased securities of defendant
As was admitted after October 30, 1997, in Company press releases, Company filings with the
every year from 1992 through the third quarter of 1997 was overstated in each year by more
These overstatements of income totalled an astounding $1.32 billion.
In fact, from 1994 through the third quarter of 1997, approximately 47 % of the Company's
Financial Accounting Standards Board Statement of Financial Accounting Standards No. 16,
conceal the Company's deteriorating financial performance, to create the illusion that WMX
It was the President and Chairman of the Company who decided to violate mandatory accounting
The Company's income was overstated by hundreds of millions of dollars due to understatements
Therefore, the purported $25,000 per truck salvage value was entirely fictitious, and the
That accounting assumed landfill capacity for which required legislative or regulatory
That accounting also included landfill capacity expansions which were sDecificallv mohibited
When even these methods were not enough to create the illusion of earnings growth, as Waste
A few months later, a new Chief Executive Officer from outside the Company was found, who was
Despite these inducements, the new Chief Executive Officer resigned after only three months,
The aforementioned conduct and practices operated to artificially inflate the market price of
GO Plaintiff Androsia International Trade purchased 1,000 shares of Waste Management common
The stock of Waste Management was traded in an efficient market on the New York Stock
Waste Management provides solid waste and hazardous waste management and recycling services
Defendant Buntrock also served as the Company's Chief Executive Officer from 1968 until 1996,
Defendant Rooney is liable for the misrepresentations and omissions alleged herein that were
Plaintiffs' claims are typical of the claims of the members of the Classes because plaintiffs
Whether the Company's publicly disseminated releases and statements during the Class Periods
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