Critical data from company's 2005 IPO was false or misleading, suit claims
Las Vegas-based Global Cash Access is facing the potential wrath of some of its
shareholders as a class-action lawsuit was filed against the company in federal court last
week seeking unspecified damages related to its 2005 prospectus for a $225 million
initial public offering.
New York-based law firm Abraham, Fruchter & Twersky filed the suit on behalf of a
number of Global Cash Access shareholders. The suit claims that the prospectus for the
automated teller and cash access product company was false or misleading. Among the
claims: that the company was unable to accurately calculate the amount of commissions
owed to customers, improper calculations of commissions and understated company
Kirk Sanford, the company's former chief executive officer was named as a defendant.
Also named as defendants were co-founders Karim Maskatiya and Robert Cucinotta;
Summit Partners, a large Global Access shareholder; and two investment banks,
Goldman Sachs & 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.
An investigation by Global Cash Access's audit committee in December "did not uncover
any further issues relating to GCA's interpretation of contract clauses related to the
calculation of commission," the company said.
The Las Vegas Review-Journal noted that Sanford retired as the company's CEO in
November of last year. He became a special advisor for Xyience, a privately-held energy
drink company that is currently undergoing Chapter 11 bankruptcy. Sanford recently left
Xyience as well.
Scott Betts replaced Sanford at Global Cash Access.
GCA shareholders in class action suit against company
April 15, 2008