Cohen Milstein Sellers & Toll PLLC Announces The Investigation Of MagicJack VocalTec, Ltd.

Cohen Milstein Sellers & Toll PLLC is conducting an investigation to determine whether magicJack VocalTec, Ltd. (“magicJack” or the “Company”) and certain of its officers and directors made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

A class action lawsuit was filed in the U.S. District Court for the Southern District of New York by another law firm on behalf of purchasers of the common stock of magicJack VocalTec, Ltd. (NASDAQ: CALL) between February 28, 2012 and January 8, 2013, inclusive (the “Class Period”).

The complaint alleges that magicJack and certain of its officers and directors (“Defendants”) misrepresented and/or failed to disclose that: (1) the Company overstated its revenue, earnings and cash flow; (2) the Company overstated its cash balance by investing in highly aggressive, unconventional securities; (3) the Company overstated its earnings by inconsistently treating its allowance for doubtful accounts and billing adjustments; (4) the Company improperly altered the estimated life of its assets, causing a decrease in depreciation expense; (5) while the Company claimed it was writing down excess inventory of chips it instead wrote down finished products to hide weakening sales; and (6) as a result of the foregoing, the Company’s financial statements were materially false and misleading.

On January 9, 2013 a report was published by an anonymous short-seller using the pseudonym “Copperfield Research” accusing the Company of overstating its revenues and income, engaging in “financial shenanigans, every shade of slimy” and “using accounting gimmicks to create a myriad of unsustainable earnings.” The report stated that:

We will unequivocally show that magicJack has presented its retail investor base with earnings press releases and financial tables that are overstated and later altered based on the corresponding SEC filings. It is our belief that the company wantonly misrepresented its financial results in front of a proposed secondary offering, and has continued to provide investor correspondence that is blatantly misleading and inaccurate. This brazen stock manipulation has been exacerbated by a series of ploys to attract and pump retail investors. We believe that an SEC investigation is not only warranted, but is a necessity as magicJack's Board of Directors appears deeply conflicted and agnostic towards oversight.

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