Adelphia shareholders' claims against banks tossed
EmptyNEW YORK -- A Manhattan bankruptcy judge has dismissed 12 of 13 claims by Adelphia Communications Corp. shareholders accusing the former cable TV operator's investment banks of fraud and other wrongdoing.
Judge Robert Gerber threw out claims alleging breach of contract, unjust enrichment, and violations of federal racketeering laws because the committee representing shareholders failed to show or adequately allege wrongdoing, according to the Aug. 17 ruling.
The judge let stand one claim accusing Citigroup Inc.'s Salomon Smith Barney unit of negligence in recommending that Adelphia sell shares in public offerings and private placements when it knew the company wasn't getting enough value for them. The unit is now known as Citi Markets & Banking.
Gerber also allowed the investors to refile claims against some banks alleging fraud and fraudulent concealment.
Defendants in the case also include Bank of America Corp., JPMorgan Chase & Co. and Wachovia Corp., among other banks, court papers show.
Peter Morgenstern, a partner at Morgenstern, Jacobs & Blue LLC who represents the equity investors, did not immediately return a call for comment. Citigroup was not immediately available for comment.
Adelphia was once the fifth-largest U.S. cable television company before an accounting scandal that led to its June 2002 bankruptcy.
Founder John Rigas was sentenced to 15 years in prison, and his son Timothy, who was once Adelphia's finance chief, was sentenced to 20 years. Adelphia's cable assets were sold to Comcast Corp. and Time Warner Inc.