Wechsler Harwood Halebian & Feffer LLP Files Class Action Against Critical Path, Inc. (Nasdaq: CPTH)

Wechsler Harwood Halebian & Feffer LLP filed a securities class action lawsuit in the United States District Court for the Northern District of California on behalf of all investors who bought the securities of Critical Path, Inc. (NASDAQ: CPTH) ("Critical Path" or the "Company") in the period from June 15, 2000 and February 1, 2001, inclusive (the "Class Period").

The complaint charges that Critical Path, along with David Hayden (Chairman of the Board of the Company), David Thatcher (President and Secretary of the Company), Douglas Hickey (Chief Executive Officer of the Company), William Rinehart (Vice President of world wide sales for the Company) and Mark Rubash (former Chief Financial Officer of the Company) (together, "Defendants") violated the Securities Exchange Act of 1934. Critical Path touts itself as a leading provider of complete end-to-end Internet messaging and collaboration solutions for Internet service providers, telecommunications providers, web hosting companies, web portals and corporations. The complaint alleges that defendants artificially inflated the price of Critical Path stock throughout the Class Period by disseminating false and misleading statements concerning the Company's business and revenues for 2000 and beyond in order to, among other things, sell over $21 million worth of common stock held by Company insiders. The complaint further alleges, amongst other things, that defendants concealed the fact the Company's future revenues would decline due to the fact that many of the Company's customers needed to cut capital expenditures

On January 18, 2001, after the market closed, defendants caused Critical Path to announce that the Company would report a loss in the fourth quarter 2000, as opposed to positive earnings which it had been touting for months, as well as a loss for the first quarter 2001, allegedly due to: higher costs from the Company's acquisition of PeerLogic, Inc.; dot-com customers going out of business; and an accounting change that required the Company to defer $7 million in licensing revenue. This was directly contrary to what Critical Path had been telling the investing public throughout the entire Class Period. This revelation shocked the market, causing Critical Path's stock to plummet $11 per share, or 55%, from $20 per share to close at $9 per share on January 18, 2001, making it the second-largest percentage decliner in U.S. markets that day. Defendants' misconduct wiped out millions of dollars in market capitalization as Critical Path stock fell from its Class Period high of approximately $78 per share, as the truth about Critical Path, its operations and prospects began to reach the market.

Further, on February 2, 2001, the Company disclosed the full extent of its fraud when it announced over the PRNewswire that its Board of Directors formed a special committee to conduct an investigation into the Company's revenue recognition practices. According to published reports and the Company's press release, the Company has discovered a number of transactions that put into question the Company's financial results. On January 18, 2001, the Company had announced fourth quarter results of $52 million in revenue and net loss, excluding special charges, of $11.5 million. This information had caused the stock to decline substantially. The Company, however, now believes that these results were "materially misstated" and it has further cautioned that its investigation has just begun. The Company also announced that the Board of Directors placed defendants Thatcher and Rinehart on administrative leave. This announcement again shocked the market, and the Company's stock price plunged by an additional 61.6%, or $6.20, to $3.86 in pre-market trading, prior to trading being halted on the morning of February 2, 2001.

Plaintiff seeks to recover damages on behalf of all investors who purchased Critical Path securities during the Class Period and who suffered damages as a result, and is represented by Wechsler Harwood Halebian & Feffer LLP, which has extensive experience representing investors in class actions. The reputation and expertise of the firm in investor and other class action litigation has been repeatedly recognized by the courts, which have appointed the firm to major positions in complex class action litigations. For more information about Wechsler Harwood Halebian & Feffer LLP, please visit the firm's website at http://www.whhf.com/.

If you are a member of the Class described above, and if you meet certain other legal requirements, you may, no later than April 3, 2001, move the Court to serve as a lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff."

If you would like to discuss this action or have any questions concerning this notice or your rights or interests with respect to this matter, please contact the following:

  Wechsler Harwood Halebian & Feffer LLP
  488 Madison Avenue, New York, New York 10022
  Telephone: 877-935-7400 (toll free)
  Craig Lowther, Shareholder Relations, ext. 257 or clowther@whhf.com

SOURCE: Wechsler Harwood Halebian & Feffer LLP

Contact: Craig Lowther, Shareholder Relations of Wechsler Harwood
Halebian & Feffer LLP, ext. 257, clowther@whhf.com

Website: http://www.whhf.com/