Investors file federal suit against Sprint and top executives

KANSAS CITY, Mo. -- A group of investors are suing Sprint Corp., alleging the company and two top executives failed to disclose they improperly avoided substantial tax liabilities as a result of employees exercising numerous stock options.

The class-action lawsuit was filed Friday in United States District Court in Kansas City, Kan., on behalf of investors who purchased Sprint FON stock between Feb. 1, 2001, and Feb. 5.

The complaint alleges Sprint, accounting giant Ernst & Young, chief executive and chairman William Esrey and president and chief operating officer Ronald LeMay violated the Securities Exchange Act of 1934.

Esrey and LeMay are stepping down amid questions about use of a questionable tax shelter.

Sprint already named veteran telecommunications executive Gary Forsee as Esrey's successor, and is waging a bitter public battle over him with rival BellSouth, where he has been vice chairman. The dispute likely will be solved only through arbitration.