Another shareholder lawsuit filed against StarMedia

NEW YORK, Nov 27 Reuters reported that law firm Wechsler Harwood Halebian & Feffer Llp on Tuesday said it launched a shareholder class action lawsuit against StarMedia Network Inc. , the seventh such lawsuit announced against the troubled Internet media company this month. Wechsler Harwood, filing in U.S. District Court for the Southern District of New York, said it is suing on behalf of all StarMedia shareholders who bought the company's stock between April 11, 2000 and November 19, 2001.

The lawsuit, filed against StarMedia, company co-founder and former chief executive and chairman Fernando Espuelas and former chief financial officer Steven Heller, charges misrepresentation about the company's financial performance.

The complaint alleges StarMedia, a bellwether for the Latin American dot-com sector, reported artificially inflated financial results in press releases and filings made with the Securities and Exchange Commission by improperly recognizing revenue in violation of generally accepted accounting principles.

The complaint alleges two StarMedia subsidiaries, AdNet S.A. de C.V. and StarMedia Mexico S.A. de C.V., engaged in improper accounting practices, having the effect of overstating StarMedia's reported revenues and earnings by $10 million.

StarMedia on November 19 said it would restate results due to improperly recognized revenue at the two Mexican units, and that Espuelas and Heller had resigned. That same day the Nasdaq Stock Market halted trading in StarMedia shares, last trading at 38 cents a share, down 94 percent from year-ago levels.

StarMedia said it initially concluded the two Mexican units improperly recognized $10 million in revenue from October 1, 2000 through June 30, 2001.

The company, which said over the summer it would reassess its business, has been contending with management changes as well as an advertising slump.