• by Erik Sass  @eriksass1, May 2, 2008

Radio ratings firm Arbitron is being sued by one of its institutional investors for allegedly deceiving shareholders about the likelihood of delays in the introduction of the company's Portable People Meter ratings. The class-action lawsuit, brought by the Plumbers and Pipefitters Local Union #630 Pension Annuity Trust Fund, seeks damages for Arbitron investors who bought stock during that period.

A member of the plaintiff's counsel, contacted Thursday, did not return calls seeking to identify the institutional investor.

The lawsuit, filed on Wednesday by Coughlin Stoia Geller Rudman & Robbins, accuses Arbitron of issuing "materially false and misleading statements" suggesting that PPM ratings would be introduced on schedule, when some executives knew they would not be.

Arbitron's later announcement that it would delay introducing PPM service in some markets caused its stock to fall almost 15% to $41.70, according to the lawsuit. The plaintiffs argue that the alleged deception constitutes a violation of the Securities Exchange Act of 1934.

By filing a class-action lawsuit, the law firm and its client are encouraging other dissatisfied investors to join the case. It is open to investors who purchased Arbitron shares any time between July 19 and Nov. 26, 2007.

On July 19, 2007, Arbitron filed a form 8-K with the Securities and Exchange Commission that contained the press release summarizing its second-quarter results. In the press release, Stephen Morris, the chairman, president and CEO of Arbitron, asserted: "We are currently on schedule" with PPM, and the company reiterated its previously issued guidance for the rest of 2007.

On Nov. 26, 2007, Arbitron announced publicly that it would delay the commercialization of PPM ratings in New York, Nassau-Suffolk and Middlesex-Somerset-Union by nine months; Los Angeles, Riverside and Chicago by six months; and San Francisco, San Jose and Dallas by three months. The company's decision to delay introduction of PPM ratings followed protests from major clients--including Clear Channel Radio, Cumulus Media, Cox Radio and Radio One--that the company was failing to meet its target sample sizes, underrepresenting certain key demos.