Legg Mason was named in a class-action lawsuit in U.S. District Court in New York, charging the manager's executives with "fraud and deceit" in their depiction of benefits shareholders would gain from the June 2005 acquisition of Citigroup Asset Management. The lawsuit, filed Monday by Robert L. Garber — who purchased a total of 88 shares of stock between July 25, 2005, and June 1, 2006 — cited the sharp declines Legg Mason's share price has sustained this year as quarterly earnings failed to meet the consensus estimates of analysts. Mr. Garber alleged Legg Mason's claims of the potential benefits of the CAM acquisition were "a fiction."
Legg Mason Inc. spokeswoman Mary Athridge said the suit was "without merit" and that the firm will vigorously contest it. William S. Lerach and Samuel H. Rudman, lawyers with Lerach Coughlin Stoia Geller Rudman & Robbins LLP representing Mr. Garber, weren't immediately available for comment.
In late trading today, Legg Mason's share price was down 1.5% at $86.57.