JDS Uniphase securities fraud trial under way

By Amanda Beck

OAKLAND, Calif., Oct 23 (Reuters) - Lawyers in one of the biggest shareholder suits to go to trial on Tuesday said JDS Uniphase Corp. (JDSU.O: Quote, Profile, Research) and four of its former top executives lost $18 billion for investors by painting a rosy picture of the company's finances when its stock was about to collapse.

JDS Uniphase, a dot-com boom darling, and its former officials -- chief executives Kevin Kalkhoven and Jozef Straus, chief financial officer Anthony Muller and chief operating officer Charles Abbe -- are accused of securities fraud and insider trading.

"They knew in the year 2000 what was to come in the year 2001," plaintiffs' attorney Barbara Hart said in court. "Instead of telling the public, they cashed out, selling hundreds of millions of dollars of stock, benefiting themselves."

JDS Uniphase makes and supplies components for fiber-optic networks to telecommunications providers. Investors embraced it during the dot-com boom as it went on a dizzying merger spree, but they quickly soured on JDSU, which rang up a staggering $50.6 billion net loss in fiscal 2001 when business spending on telecommunications products stalled.

Its shares plunged 99 percent.

Lawyers for JDS Uniphase are scheduled to present their opening arguments in U.S. District Court for the Northern District of California in Oakland, California on Wednesday and have said in court filings that the company and its former executives acted appropriately.

Only an estimated 1 percent of securities class-actions ever go to trial, because they usually are dismissed or settled beforehand.

Investors who lost money on the shares include 160,000 firefighters, teachers and other public employees invested in the company through Connecticut Retirement Plans and Trust Funds, which lost about $65 million, the largest loss for any one shareholder in JDS Uniphase.