It emerged this week that US telecommunications firm, Sprint is now facing its seventh class action lawsuit over questionable tax shelter use by top executives.
Earlier this year, William Esrey, Sprint's chairman and chief executive, and Ronald Le May, its president and chief operating officer, were forced out by the company's board over allegations that they had used shelters - upon which they were advised by Sprint's own auditor, Ernst & Young - to defer taxes on the many millions of dollars which resulted from their exercise of stock options in 1999 and 2000.
This latest suit was filed on Tuesday at the Kansas District Court on behalf of a single investor, but covers anyone who bought stock in the company between August 11, 2000, and February 13, 2003. It alleges that senior Sprint officials were aware of the potentially questionable nature of the tax shelter arrangements for some time before the matter became public.
By failing to mention this in regulatory documents and public statements, the plaintiff, R. Scott Seab alleges, the company misleadingly inflated its stock prices and made it difficult for investors to make informed trading decisions.
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