in re crayfish co., ltd. securities litigation 00-cv-06766...

Ralph M. Stone (RS-4488)

SHALOV STONE & BONNER LLP

485 Seventh Avenue, Suite 1000

New York, New York 10018

(212) 239-4340

Fax (212) 239-4310

Sanford P. Dumain (SD-8712)MILBERG WEISS BERSHAD HYNES & LERACH LLP

One Penn Plaza, 49th Floor

New York, New York 10119(212) 594-5300

Co-Lead Counselfor Plaintiffs

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

x

In re CRAYFISH COMPANY SECURITIESLITIGATION

Master File No.

00 Civ. 6766 (DAB)

This Document Relates to : All Actions• a

"at^1`?

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT

Plaintiffs , by their attorneys , make the following allegations upon information and belief

(except as to the allegations specifically pertaining to the named plaintiffs and their counsel),

based upon the facts alleged below, which are predicated upon, inter alia, a review and analysis

of relevant filings made by or on behalf of Crayfish Co., Ltd. ("Crayfish" or the "Company")

with the Securities and Exchange Commission ("SEC"), press releases, news and analyst reports,

and an investigation undertaken by plaintiffs' counsel and its experts. Plaintiffs believe that

further substantial evidentiary support will exist for the allegations set forth below after a

reasonable opportunity for discovery.

JURISDICTIONAND VENUE

1. The claims asserted herein arise under and pursuant to Sections 11, 12(a)2 and 15

of the Securities Act of 1933, as amended (the "Securities Act") [15 U.S.C. §§ 77k, 771(a)(2) and

77o].

2. This Court has jurisdiction of this action pursuant to Section 22 of the Securities

Act [15 U.S.C. § 77v].

3. Venue is properly laid in this judicial district pursuant to Section 22 of the

Securities Act. The acts and conduct complained of, including the preparation , issuance and

dissemination of materially false and misleading information to the investing public, occurred in

substantial part in this judicial district.

PARTIES

4. Lead Plaintiffs Jenny Chang, Toshihiko Hagiwara, Toru Nakamichi, Meng Lin

Sun, Leslie Helm, Dennis Varga and Esther Wilhelm purchased Crayfish (defined below) shares,

pursuant to the Prospectus (defined below), on or traceable to the initial public offering of

Crayfish shares, and suffered damages.

5. Defendant Crayfish Co. ("Crayfish" or the "Company") is a provider of Internet

electronic mail services to small- and medium-sized businesses in Japan . Crayfish is organized

under the laws of Japan and maintains its corporate headquarters in Tokyo, Japan. Commencing

on or about March 8, 2000, there was an initial public offering of 4,350,000 American

Depositary Shares (ADS's) of Crayfish (the "Offering"). At the time of the Offering, each ADS

represented 1/5000th of a share of Crayfish common stock. (The ratio of shares per ADS was

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subsequently changed by Crayfish in December 2000, following the collapse of its share price, in

order to maintain its NASDAQ listing.)

6. Defendant Isao Matsushima ("Matsushima") was at all relevant times Chief

Executive Officer, President and Representative Director of the Company. Defendant

Matsushima is and at all relevant times was also an Advisor to defendant Hikari Tsushin, Inc.

Defendant Matsushima is one of four "selling shareholders" who sold in the aggregate 130

shares (or the equivalent of 650,000 ADS's) for total proceeds of approximately $15 million.

7. Defendants Morgan Stanley Dean Witter, Nomura Securities International, Inc.,

and Merrill Lynch & Co. (collectively, the "Underwriter Defendants") substantially participated

in the commission of the wrongs alleged herein through their involvement in the Offering of

Crayfish shares. The Underwriter Defendants were at all times entities engaged in the business

of investment banking, underwriting and selling securities to the public. The Underwriter

Defendants were co-lead underwriters of the Offering, for which they received substantial fees.

8. Defendant Hikari Tsushin, Inc. is a diversified Japanese company engaged in

numerous investment activities. At all relevant times, Hikari Tsushin was a controlling person

of Crayfish, within the meaning of Section 15 of the Securities Act, controlling a controlling

block of its shareholdings, through various contractual arrangements, and as a result of other

relationships between Hikari Tsushin and Crayfish. As the Prospectus notes at page 56, "As a

result [of various factors], Hikari Tsushin will have the power to substantially influence our

business decisions."

PLAINTIFFS' CLASSACTIONALLEGA TIONS

9. Plaintiffs bring this action as a class action pursuant to Fed. R. Civ. P. 23, on

behalf of themselves and on behalf of all persons who (a) purchased Crayfish shares on or

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traceable to the Offering (the "Section 11 subclass"), and/or (b) purchased Crayfish shares in the

Offering (the "Section 12 subclass"). The above-described subclasses are referred to collectively

herein as the "Class." Excluded from the Class are defendants herein, members of the

immediate family of each of the defendants, any person, firm, trust, corporation, officer, director

or other individual or entity in which any defendant has a controlling interest or which is related

to or affiliated with any of the defendants, and the legal representatives, agents, affiliates, heirs,

successors-in-interest or assigns of any such excluded party.

10. The members of the Class are so numerous that joinder of all members is

impracticable. Crayfish and certain selling shareholders sold 4,350,000 American Depositary

Shares of Crayfish stock to members of the investing public commencing on or about March 8,

2000, at a price of $24.50 per share, and, throughout the Class Period, more than 4 million shares

of outstanding shares of Crayfish were actively traded on the NASDAQ Stock Market. The

precise number of class members is unknown to plaintiffs at this time but class members are

believed to number in the thousands. In addition, the names and addresses of the class members

can be ascertained from the books and records of Crayfish, the Underwriter Defendants or their

agents.

11. Plaintiffs will fairly and adequately represent and protect the interests of the

members of the Class. Plaintiffs have retained competent counsel experienced in class action

litigation under the securities laws to further ensure such protection and intend to prosecute this

action vigorously.

12. Plaintiffs' claims are typical of the claims of the other members of the Class

because plaintiffs and all the class members' damages arise from and were caused by the same

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false and misleading representations and omissions made by or chargeable to defendants.

Plaintiffs do not have interests antagonistic to, or in conflict with, the Class.

13. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy. Since the damages suffered by individual class members may

be relatively small, the expense and burden of individual litigation make it virtually impossible

for the class members to seek redress for the wrongful conduct alleged. Plaintiffs know of no

difficulty which will be encountered in the management of this litigation which would preclude

its maintenance as a class action.

14. Common questions of law and fact exist as to all members of the Class and

predominate over any questions affecting solely individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) Whether the federal securities laws were violated by defendants' acts as

alleged herein;

(b) Whether the prospectus, registration statement, documents, filings,

releases and statements disseminated by defendants to the investing public in

connection with the Offering omitted and/or misrepresented material facts about

Crayfish; and

(c) The extent of damages sustained by members of the Class and the

appropriate measure thereof.

15. The names and addresses of the record owners of the shares of Crayfish

purchased during the Class Period are available from Crayfish's transfer agent and the

underwriters to the Offering. Notice can be provided to such record owners by a combination of

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published notice and first-class mail using techniques and a form of notice similar to those

customarily used in class actions arising under the federal securities laws.

FACTUAL ALLEGATIONS

The Offering

16. On or about February 10, 2000, defendants filed with the SEC a Form F-1

Registration Statement (the "Registration Statement") for the Offering of the shares of Crayfish

stock. Defendants thereafter filed several amendments to the Registration Statement.

17. On or about March 6, 2000, the prospectus (the "Prospectus") with respect to the

Offering and which forms part of the Registration Statement became effective and, commencing

on or around that date, Crayfish thereafter sold, through the Underwriter Defendants, the

Crayfish shares being offered.

18. Crayfish and the selling shareholders, through the Underwriter Defendants, sold

4,350,000 Crayfish ADS's (including over-allotments) commencing on or about March 8, 2000,

in the Offering, at a price of $24.50 per share. The NASDAQ component of the Offering yielded

gross proceeds of approximately $106,575,000, of which $7,460,250 was paid to the

Underwriter Defendants. The Underwriter Defendants substantially participated in and

exercised control over all aspects of the Offering.

The Materially False And Misleading Prospectus

19. In addition to the numerous materially false and misleading statements and

projections made by the defendants in the weeks surrounding the commencement of the

Offering, which are described below, the Prospectus itself was materially false and misleading

for several reasons.

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20. At the time of the Offering, Crayfish was substantially owned, and throughout the

Class Period continued to be substantially owned, by Hikari Tsushin. According to the

Prospectus, Hikari Tsushin had "the power to substantially influence our [Crayfish's] business

decisions" and "Because of Hikari Tsushin's control of the majority of the shares of our common

stock, we may be deemed to be under the control of Hikari Tsushin." Prospectus at 56. The

Prospectus also stated that "We [Crayfish] consult Hikari Tsushin on important policy and

management issues and provide Hikari Tsushin with monthly reports of our financial

performance." Prospectus at 57. The Company also had several contractual relationships with

Hikari Tsushin. Prior to the Offering and throughout the Class Period, Hikari Tsushin enjoyed

an exclusive distribution relationship with Crayfish, pursuant to which Hikari Tsushin controlled

virtually all sales distribution of Crayfish email services, and received 50% of all revenues

received in the life of any such contract it sold for Crayfish. In short, Crayfish's success

depended upon Hikari Tsushin.

21. In this regard, the Prospectus states at page 2:

We market and sell our services through our agent, Hikari Tsushin.

As of December 31, 1999, Hikari Tsushin directly and indirectly

held 50.1% of our issued shares. Hikari Tsushin has an extensive

marketing and sales network and direct-marketing know-how for

targeting the small and medium-sized business market in Japan.

Hikari Tsushin set up a network of sales agents specifically for the

sales and marketing of our Hitmail and related services.

22. Although the Prospectus purports to disclose the significant relationships

between Crayfish and Hikari Tsushin, it nowhere discloses that, at the time of the Offering,

Hikari Tsushin was experiencing a massive financial downturn, which necessarily would impact

the future profitability of Crayfish. Indeed, on March 31, 2000, only 18 trading days after

Crayfish stock was sold to the public in its initial public offering, Hikari Tsushin announced a

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significant earnings shortfall that devastated its own stock price and caused Crayfish's stock

price to decline as well.

23. If there was any doubt as to the impact these financial events were to have on

Crayfish, those doubts were put to rest on April 25, 2000, when Hikari Tsushin announced that

its earnings weakness would negatively impact its selling activities for Crayfish. But, defendants

did not disclose that the seeds of this decision to reduce sales activities for Crayfish had actually

been planted many months earlier, and, as reported by the Japanese daily newspaper Yomiuri

Shimbun, by January 2000, Hikari Tsushin had instructed sales agents to downsize because by

that time "the company's (Hikari Tsushin's) financial situation was in a tailspin." Yomiuri

Shimbun, October 9, 2000, page 9. The fact that Hikari Tsushin had begun to downsize its sales

force in January 2000 was also confirmed by Crayfish in a press release dated November 21,

2000, in which Crayfish stated in pertinent part:

The reduction in the number of new subscribers acquired

compared to previous quarters was largely attributable to the

restructuring of Hikari Tsushin's sales agents force, which was

reduced in numbers from 1,200 persons to 400 persons between

January and September 2000. This resulted in a decrease in the

number of sales persons available to market hitmail and acquire

new subscribers.

Crayfish Press Release, "Crayfish Announces Results for Fiscal Year 2000 Ended September 30,

2000" dated November 21, 2000, at page 2.

24. As a result of these disclosures, which directly related to facts that existed before

the Offering but which were not disclosed to investors, and necessarily should have been

disclosed, the price of Crayfish stock has plummeted to well below $2.00 per share.

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Inadequate Risk Disclosure

25. Although the Prospectus contains boilerplate risk disclosures which purport to

warn investors about "possible" factors which "could" or "may" negatively impact Crayfish's

earnings , none of these risk disclosures actually identified the facts described above which were

in fact occurring at the time of the Offering. In addition, the Prospectus misleadingly included

forward-looking risk disclosures without disclosing that the warned-of risks were actually

occurring.

26. For example, the Prospectus offers the following purported warning on page 7:

If salespersons of Hikari Tsushin 's sales agents engage in

inappropriate sales efforts, our business may suffer.

We do not directly control salespersons of Hikari Tsushin's sales

agents, and we rely on Hikari Tsushin and its sales agents to

ensure that those salespersons conduct their sales and marketing

activities appropriately. Employment of any inappropriate sales

efforts or any other misconduct on the part of any salespersons

could materially adversely affect our business.

27. The foregoing risk warning failed to disclose that prior to and at the time of the

Offering, Hikari Tsushin sales agents had engaged in inappropriate sales and marketing

activities. For example, a Morgan Stanley Dean Witter analyst report dated August 23, 2000,

explained that many customers were cancelling their Crayfish contracts after seven to eight

months, while they could normally only do so within six months. The Morgan Stanley report

stated pertinently that, "[c]urrently, many of those cancelling their contracts originally signed

due to arguably overly aggressive sales techniques on the part of Hikari Tsushin ...." In a

November 21, 2000, press release, Crayfish provided further detail, by stating:

The increase in cancellations was due to several factors. Prior to

the restructuring of its sales force, Hikari Tsushin had relied

heavily on a large group of sales agents with whom it had

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subcontracted to market Hitmail. Many of the subscribers who

were signed on by the subcontracted agents apparently lacked real

need for the e-mail services provided by the subscription and

cancelled their subscriptions shortly after the conclusion of their

initial six-month subscription period. The restructuring of the

sales force also decreased the level of customer service and

support for subscribers, resulting in further cancellations. Hikari

ceased all Hitmail marketing efforts on behalf of the Company as

of October 31, 2000. However, it is likely that a high subscriber

cancellation rate will continue for some period of time, and

possibly for the next several months.

28. As a result of the improper and overly aggressive marketing activities of Hikari

Tsushin, numerous other statements in the Prospectus were materially false and misleading. For

example:

(a) The statement on page 34 of the Prospectus (and accompanying chart)

that "As of January 31, 2000, we had 44,811 Hitmail service customers, as counted by the

number of registered domain names." This statement was materially false and misleading

because the number of subscribers was artificially inflated as a result of improper marketing

activities that boosted near-term subscriber figures to be offset by numerous later-period

cancellations, which in fact did soar after the Offering. Likewise, the statement that the

Company had obtained 7,208 customers in January 2000 (Prospectus at 26) was similarly

inflated.

(b) The chart on page 34 of the Prospectus, which showed dramatically

increasing numbers of customers on a monthly basis, was materially false because the figures

were distorted by the improper sales activities as noted in the prior subparagraph, and the chart

was materially misleading because the chart suggested greater growth than the Company in fact

experienced.

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(c) The statement on page 38 of the Prospectus, that "We believe that our

rapid growth has solid foundations. These include: ... Our business relationships with Hiikari

Tsushin, which supports us with effective marketing ...." This statement failed to disclose that

Hikari Tsushin's marketing efforts were aggressive and improper and temporarily overstated

customer figures in exchange for vastly increased cancellation figures in later periods.

(d) The statements describing "Hikari Tsushin's Direct-Marketing

Activities" on pages 45-46 of the Prospectus, including the statement that "The number of Hikari

Tsushin salespersons dedicated to selling and marketing our Hitmail and related services has

increased rapidly, from only 105 at January 31, 1999 to about 1,200 in January 1999 [should

read January 2000]. We expect the number of salespersons will continue to grow ...." This

statement misleadingly suggested that the Company would experience growth at a time when

Hikari Tsushin was reducing the number of salespersons devoted to Crayfish sales.

29. Following the collapse of Crayfish's stock price, additional disclosures about the

Company and its previously undisclosed problems emerged. According to a November 6, 2000

article in The Nikkei Weekly, at a November 1, 2000 press conference, defendant Matsushima

"indicated that Hikari Tsushin's marketing methods had been too forceful and had caused

distrust among Crayfish customers." Also on November 1, 2000, Crayfish announced that it had

severed its relationship with Hikari Tsushin.

30. On November 21, 2000, Crayfish announced that certain directors and corporate

auditors had "retired" from the Company.

31. Thereafter, according to an April 5, 2001 press release issued by Crayfish, the

Company's corporate auditors expressed to Crayfish's board of directors that the board should

relieve Isao Matushima of certain representative authority at the Company because the auditors

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were of the opinion that Crayfish did not properly use the proceeds of its Offering. When the

board of directors rejected this proposal, the Company's corporate auditors resigned.

The Road Show And Post-IPO Reports

32. At or about the same time as the Offering, the defendants herein went on a "Road

Show" in which they actively promoted the Company as an investment. During this Road Show,

the defendants met with members of the investment community to describe the nature of the

Company's business, its past financial results and its anticipated future results. The Road Show

included presentations by the defendants and question and answer sessions. Included among the

projected future results were a variety of earnings estimates, including estimates that the

Company would earn certain specific amounts per share in fiscal 2000. During these

presentations, which became part of the Offering process, defendants also spoke in highly

positive terms about the Company's near-term and long-term prospects.

33. Shortly after the Road Show, the Underwriter Defendants issued "booster shot"

reports (i.e., well-timed and favorable analyst reports from an underwriter in the Offering) about

Crayfish which again spoke in highly positive terms about the Company and which shared

additional estimates and financial projections.

34. In negligent disregard of the truth concerning Crayfish's profitability, business

success , expected substantial profitability and market leadership, defendants made or

participated in the making of materially false and/or misleading statements to the investing

public as particularized above. These representations were materially false and/or misleading

when made for the reasons set forth above and in that they failed to disclose the following

material , adverse facts about Crayfish' s revenues, earnings, business , financial condition and

prospects , which facts were negligently disregarded by defendants, including that the Company

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was confronting a significant hardship relating to its partnerships and contractual relations with

Hikari Tsushin and thus that the Company would not be as profitable, and would not experience

the revenue growth that defendants previously represented.

35. The subsequent disclosures relating to Hikari Tsushin revealed matters relating to

Crayfish's financial condition and prospects which by their nature were ongoing and material.

These problems were operative throughout the relevant time period and contradicted and

discredited defendants' false statements of optimism and outlook to the investing public. As a

result of the factors described herein, the price of Crayfish's shares has steadily and sharply

declined from the Offering price of $24.50 per share to below $6.00 per share in four short

months, reflecting a more than 70% decline in the market price of the Company's stock.

COUNT I

[Against All Defendants For Violations

Of Section 11 Of The Securities Act]

36. Plaintiffs repeat and reallege each and every allegation contained above.

37. This Count is brought by plaintiffs pursuant to Section 11 of the Securities Act,

15 U.S.C. § 77k, on behalf of the Class, against all defendants and does not sound in fraud.

38. The Registration Statement for the Offering was inaccurate and misleading,

contained untrue statements of material facts, omitted to state other facts necessary to make the

statements made not misleading, and concealed and failed adequately to disclose material facts

as described above.

39. The Company is the registrant for the Offering. The Underwriter Defendants

were the lead underwriters of the Crayfish shares sold in the Offering as defined in Section

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11(a)(5) of the Securities Act. The defendants named herein were responsible for the contents

and dissemination of the Registration Statement and the Prospectus.

40. As issuer of the shares, Crayfish is strictly liable to plaintiffs and the other

members of the Class for the misstatements and omissions. The Underwriter Defendants are

also strictly liable for their sale of Crayfish shares pursuant to the Offering.

41. As underwriters of the Offering, each of the Underwriter Defendants owed to the

purchasers of the shares of Crayfish, including plaintiffs and the other members of the Class, the

duty to make a reasonable and diligent investigation of the statements contained in the

Prospectus at the time it became effective, to ensure that said statements were true and that there

was no omission to state a material fact required to be stated in order to make the statements

contained therein not misleading. The Underwriter Defendants knew, or in the exercise of

reasonable care, should have known of the material misstatements and omissions contained in

the Prospectus as set forth herein. As such, the Underwriter Defendants are liable to plaintiffs

and the other members of the Class.

42. None of the defendants named herein made a reasonable investigation or

possessed reasonable grounds for the belief that the statements contained in the Registration

Statement and the Prospectus were true and without omissions of any material facts and were not

misleading.

43. Defendants issued, caused to be issued and participated in the issuance of

materially false and misleading written statements to the investing public which were contained

in the Prospectus, which misrepresented or failed to disclose, inter alia, the adverse facts set

forth above. By reason of the conduct herein alleged, each defendant violated, and/or controlled

a person who violated, Section 11 of the Securities Act.

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44. Plaintiffs acquired Crayfish shares issued pursuant to the Registration Statement

and Prospectus.

45. Plaintiffs and the other members of the Class have sustained damages. The value

of Crayfish shares has declined substantially subsequent to, and due to, defendants ' violations.

46. At the times they purchased Crayfish shares, plaintiffs and the other members of

the Class were without knowledge of the facts concerning the wrongful conduct alleged herein

and could not have reasonably discovered those facts prior to the Offering. Less than one year

has elapsed from the time that plaintiffs discovered or reasonably could have discovered the

facts upon which this Complaint is based to the time that plaintiffs filed this Complaint. Less

than three years have elapsed from the time that the securities upon which this Count is brought

were bona fide offered to the public to the time plaintiffs filed this Action.

COUNT II

[Against The Underwriter Defendants For Violations Of

Section 12(a)(2) Of The Securities Act]


48. This Count is brought by plaintiffs pursuant to Section 12(a)(2) of the Securities

Act on behalf of all purchasers of Crayfish shares in connection with, and traceable to, the

Offering and does not sound in fraud.

49. Defendants were sellers, offerors, and/or solicitors of sales of the shares offered

pursuant to the March 6, 2000 Prospectus.

50. The Prospectus contained untrue statements of material facts, omitted to state

other facts necessary to make the statements made not misleading, and concealed and failed to

disclose other material facts. Defendants' actions of solicitation included participating in the

preparation of the false and misleading Prospectus.

15

51. The defendants owed to the purchasers of Crayfish shares, including plaintiffs and

the other members of the Class of purchasers of Crayfish shares, the duty to make a reasonable

and diligent investigation of the statements contained in the Offering materials, including the

Prospectus contained therein, to insure that such statements were true and that there was no

omission to state a material fact required to be stated in order to make the statements contained

therein not misleading. Defendants knew of, or in the exercise of reasonable care should have

known of, the misstatements and omissions contained in the Offering materials as set forth

above.

52. Plaintiffs and the other members of the Class purchased or otherwise acquired

Crayfish shares pursuant to, and traceable to, the defective Prospectus. Plaintiffs and the other

members of the Class did not know of, or in the exercise of reasonable diligence could not have

known of, the untruths and omissions contained in the Prospectus.

53. Plaintiffs, individually and representatively, hereby offers to tender to defendants

those securities which plaintiffs and the other members of the Class continue to own, on behalf

of all members of the Class who continue to own such securities, in return for the consideration

paid for those securities together with interest thereon.

54. By reason of the conduct alleged herein, defendants violated, and/or controlled a

person who violated, § 12(a)(2) of the Securities Act. Accordingly, plaintiffs and the other

members of the Class who hold Crayfish shares purchased in the Offering have the right to

rescind and recover the consideration paid for their Crayfish shares and, hereby elect to rescind

and tender their Crayfish shares to the defendants sued herein. Plaintiffs and the other members

of the Class who have sold their Crayfish shares are entitled to rescissory damages.

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55. Less than one year has elapsed from the time that the securities upon which this

Count is brought were sold to the public to the time of the filing of this action.

COUNT III

[Against Isao Mastushima and Hikari Tsushin ForViolations of Section 15 of the Securities Act]


57. This Count is brought by plaintiffs pursuant to Section 15 of the Securities Act

against the Isao Matsushima and Hikari Tsushin and does not sound in fraud.

58. Each of the defendants named in this Count was a control person of Crayfish by

virtue of their positions as directors and/or senior officers, and controlling shareholdings of

Crayfish. The Defendants also served on and or controlled Crayfish's Board of Directors.

Finally, the Defendants each had a series of direct and/or indirect business and/or personal

relationships with other directors and/or major shareholders of Crayfish.

59. Each of the Defendants was a culpable participant in the violations of Sections 11

and 12(a)(2) of the Securities Act alleged in Counts I and II above, based on their having signed

the Registration Statement and having otherwise participated in the process which allowed the

Offering to be successfully completed.

60. As a result of the foregoing, plaintiffs and the other members of the Class

suffered damages.

PRA YER FOR RELIEF

WHEREFORE, plaintiffs, on behalf of themselves and the other members of the Class,

pray for judgment as follows:

A. Declaring this action to be properly maintained as a plaintiff class action

pursuant to Rule 23 of the Federal Rules of Civil Procedure;

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B. Awarding plaintiffs and the other members of the Class damages together

with interest thereon;

C. Awarding plaintiffs and the other members of the Class rescission on

Count II to the extent they still hold Crayfish shares, or if sold, awarding rescissory damages in

accordance with Section 12(a)(2) of the Securities Act;

D. Awarding plaintiffs and the other members of the Class their costs and

expenses of this litigation, including reasonable attorneys' fees, accountants' fees and experts'

fees and other costs and disbursements; and

E. Awarding plaintiffs and the other members of the Class such other and

further relief as may be just and proper under the circumstances.

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JURY TRIAL DEMANDED

Plaintiffs demand a trial by jury.

Dated: July 19, 2002 SHALOV STONE & BONNER LLP

By:. ^A-)4ST^-"


485 Seventh Avenue, Suite 1000New York, New York 10018(212) 239-4340Fax (212) 239-4310

MILBERG WEISS BERSHAD HYNES & LERACH LLP

By: /zA(^

Sanford P . Dumain (SD-8712)

One Penn Plaza , 49" FloorNew York, New York 10119(212) 594-5300Fax (212) 868-1229

Co-Lead Counselfor Plaintiffs

Ofcounsel:

Ira M. Press

Kirby Mclnerny & Squire LLP830 Third AvenueNew York, New York 10022

Andrew M. Schatz

Schatz & Nobel, P.C.

330 Main Street

Hartford , Connecticut 06106

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Robert I. HardwoodWechsler Harwood Halebian & Feffer, LLP488 Madison AvenueNew York, New York 1022

Fred T. Isquith

Wolf Haldenstein Adler Freeman & Herz LLP

270 Madison Ave.


Jules BrodyStull, Stull & Brody

6 East 4511' Street


Joseph H. Weiss

Weiss & Yourman

551 Fifth Ave., Suite 1600New York, New York 10176

Brian P. MurrayRabin & Peckel, LLP

275 Madison Avenue


Stanley M. GrossmannPomerantz , Haudek, Block, Grossman & Gross, LLP100 Park Avenue, 261 FloorNew York, New York 10017

Jeffrey S. Abraham

One Penn Plaza


Leo Desmond

2161 Palm Beach Lakes Blvd.West Palm Beach, Florida 33409

Charles J. Piven

401 East Pratt Street, Suite 2525

Baltimore , Maryland 21202

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CERTIFICATE OF SERVICE

This is to certify that true and correct copies of the foregoing Consolidated Class Action Complaint was served by

Hand Delivery on the following counsel of record on this 19`h day of July 2002:

Arthur M. Handler, Esq.Handler & Goodman LLP805 Third Avenue, 8" FloorNew York, New York 10022

Attorneysfor defendant Crayfish Co.

Kenneth M. Kramer, Esq.Shearman & Sterling599 Lexington AvenueNew York, New York 10022

Attorneysfor defendants Morgan Stanley Dean Witter,Nomura Securities International, Inc., andMerrill Lynch

Cyrus Benson III, Esq.White & Case LLP1155 Avenue of the AmericasNew York, New York 10036

Attorneysfor defendant Hikari Tsushin, Inc.

Jonathan Rosenberg, Esq.William J. Sushon, Esq.O'Sullivan LLP30 Rockefeller Center, 24`h FloorNew York, New York 10112

Attorneys for defendant Isao Matsushima


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in re crayfish co., ltd. securities litigation 00-cv-06766...

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