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Hub Group facing legal hubbub after admitting accounting irregularities


The Enron fallout has filtered down to Hub Group Inc. After the intermodal marketing company Feb. 12 reported accounting irregularities at 65-percent owned subsidiary Hub Group Distribution Services — estimating that since 1999 it overstated the subsidiary's after-tax earnings between $3 million and $4 million — law firm Millberg Weiss Bershad Hynes & Lerach LLP Feb. 19 filed a class action lawsuit on behalf of parties that purchased Hub Group stock between April 21, 1999 and Feb. 12, 2002.
The suit names as defendants Hub Group, Chairman Philip Yeager, Vice Chairman and Chief Executive Officer David Yeager, President and Chief Operating Officer Thomas Hardin, Vice President and Chief Financial Officer Jay Parker, former Vice President-Finance, Chief Financial Officer and Treasurer William Crowder, who retired May 31, 1999, and accounting firm Arthur Andersen LLP.
The suit alleges that Hub Group violated aspects of Securities Exchange Act by misrepresenting financial reports between April 21, 1999 and Feb. 12, 2002, thus artificially inflating the company's stock price.
Hub Group Feb. 19 announced it received a letter from The Nasdaq Stock Market Inc. stating that the company's public filings made during fiscal 1999, 2000 and 2001 don't satisfy certain NASDAQ obligations, and, if uncorrected, could lead to the delisting of Hub Group securities.
Hub Group then delivered a letter to NASDAQ requesting a hearing, which automatically stays the delisting process.
Hub Group officials believe an audit of 2001 financial statements and any necessary restatement for prior years will be completed within the next several weeks. The company also plans to file its annual report with Securities and Exchange Commission by the March 31 due date, which company officials believe would bring Hub Group in full compliance with NASDAQ obligations.
Hub Group, too, is conducting a review of the accounting irregularities at its subsidiary and has taken action to ensure that this problem will not recur, according to a prepared statement.

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