A class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of all persons who purchased or otherwise acquired the common stock of Netlist, Inc. ("Netlist" or the "Company") (NASDAQ: NLST) in connection with its November 30, 2006 Initial Public Offering ("IPO") through April 16, 2007, inclusive (the "Class Period").

The Complaint charges Netlist and certain of the Company's executive officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and materially false and misleading statements concerning the Company's business, operations and prospects caused Netlist's stock price to become artificially inflated, inflicting damages on investors. Netlist is a designer and manufacturer of high-performance memory subsystems, which are sold to original equipment manufacturers in the server, high-performance computing, and communications markets. The Complaint alleges that defendants failed to disclose, among other things, that: (1) the Company was experiencing the effects of an over-supplied memory chip market, and demand for the Company's products had deteriorated substantially; (2) due to excessive inventory levels, the Company's two largest customers would be forced to slash their product orders to return to acceptable levels; (3) the Company's profit margins were quickly eroding in the memory chip market; (4) the Company lacked adequate internal controls; and (5) as a result of the foregoing, among other things, the Company's Registration Statement was false and misleading at all relevant times.

On April 16, 2007, Netlist shocked investors when it reported its first quarter 2007 preliminary financial results, which disclosed for the first time that its operating results would be dramatically lower than investors were led to believe, primarily due to an oversupplied dynamic random access memory market, which in turn affected the Company's product pricing and gross margins. Additionally, the Company revealed that it had experienced a lower than expected demand for high-end products from its largest customers, due to excess inventory which had also significantly reduced demand for the Company's products. As a result of this news, shares of the Company's stock declined more than 28 percent, or $1.68 per share, to close on April 17, 2007, at $4.29 per share, on unusually heavy trading volume.

If you are a member of the class, you may, no later than July 27, 2007, request that the Court appoint you as lead plaintiff of the class. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs can participate in important decisions which could affect the recovery for class members.

If you wish to discuss this action, or have any questions concerning this notice or your rights, please contact us, toll free, at (888) 529-4787 or by email at info.newcases@kmslaw.com.

Kirby McInerney & Squire, LLP has specialized in complex litigation, including securities class actions, for several decades. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and the firm's achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, class actions in general, or about the role of the lead plaintiffs in a securities class action can be obtained through Kirby McInerney & Squire, LLP's website at http://www.kmslaw.com/.

Website: http://www.kmslaw.com/

But the majority opinion written by Justice Ruth Bader Ginsburg stopped short of the tougher restrictions that many in corporate America had sought and left room for legitimate cases by aggrieved investors to proceed, experts said.

"This was something of a victory for investors in that Justice Ginsburg raised the bar but not that high," said Donald Langevoort, a Georgetown University securities law professor.

Typically, plaintiffs can build much of a case in a suit's evidence-discovery phase. But yesterday's ruling, by setting a higher standard for plaintiffs trying to defeat dismissal motions made by defendants, will make it harder to reach the discovery phase.

The decision was the second one this week by the court that was a defeat for shareholders and a victory for the defendant companies. The justices ruled Monday that securities underwriters on Wall Street are generally immune from civil antitrust lawsuits.

Yesterday's decision was hailed by business groups, particularly high-technology companies, which tend to have volatile stock prices and often face lawsuits when their shares unexpectedly tumble.

"Silicon Valley can breathe a sigh of relief," said Jim Hawley, general counsel of TechNet, an industry association that filed a brief with several other technology groups urging the court to set a high hurdle for shareholder lawsuits.

Several class action attorneys also expressed relief, however, saying the court did not endorse a tougher threshold that would have harmed their legal specialization.

The decision "may cut some of the lawsuits, but it won't make a dramatic difference," said Herbert Milstein, a partner at Cohen, Milstein, Hausfeld & Toll in Washington.

The case had been closely watched because it dealt with issues at the center of the debate over so-called frivolous lawsuits filed against companies on behalf of their shareholders.

Business groups claim that attorneys who represent shareholders launch unfounded lawsuits to pressure companies into paying out settlements. Firms say they indeed often feel compelled to settle to avoid the cost of litigation and the risk of eventually losing in court, even if the plaintiffs' case isn't that strong.

Investor advocates counter that fraud occurs more frequently than businesses suggest, as executives seek to maintain high stock prices and enrich themselves, as occurred in the Enron and WorldCom accounting scandals.

The ruling dealt with a lawsuit filed in 2002 against telecommunications equipment maker Tellabs Inc. by investors claiming that executives had publicly promoted the Naperville, Ill., company's outlook when they knew it was worsening.

The case's fate hinged on the legal interpretation of a law passed by Congress in 1995 to reduce securities lawsuits.

The law said plaintiffs must show a "strong inference" of corporate malfeasance for a case to proceed. But lower courts read that guideline in different ways, with some courts being far more hospitable to securities cases than others.

In the Tellabs case, the 7th U.S. Circuit Court of Appeals in Chicago let the suit stand, saying a "reasonable person" could infer that the company had committed fraud.

The high court had been widely expected to adopt a high threshold. The question was how high.

The ruling, Justice Stephen G. Breyer wrote for the majority, "simply recognizes the real-world circumstance that when the judge's discretionary decision accords with the Commission's view . . . it is probable that the sentence is reasonable."

The court's decision in Rita v. U.S. was the latest in a line of cases that have been redefining criminal sentencing since the court ruled in 2000 that the Constitution requires a jury to prove every fact that a judge might use to increase a defendant's sentence.

In 2005, the court ruled that the federal sentencing guidelines - rules designed to ensure that similar crimes be punished similarly across the country - ran afoul of the jury-trial requirement. But it decided that the remedy was to make the guidelines advisory rather than mandatory, as they had been.

The case the court decided yesterday was meant to help define advisory.

Victor Rita, convicted of perjury and obstruction of justice, asked for a lighter sentence based in part on his past military service. But the judge gave him 33 months, as suggested by the guidelines. The U.S. Court of Appeals for the Fourth Circuit, based in Richmond, Va., upheld the sentence, saying that within-guidelines penalties are "presumptively reasonable."

This pattern has been repeated nationwide since the Supreme Court's 2005 ruling.

In that sense, legal analysts said, the court's decision at least left defendants no worse off than they had been.

In his dissent, Justice David H. Souter said that a presumption of reasonableness for within-guidelines sentences creates "gravitational pull" on judges, moving them toward reliance on the guidelines, and making it unclear what was accomplished by declaring the guidelines advisory in the first place.

But Chief Justice John G. Roberts Jr. and Justices John Paul Stevens, Antonin Scalia, Anthony M. Kennedy, Clarence Thomas, Ruth Bader Ginsburg and Samuel A. Alito Jr. agreed with Breyer, wholly or in part.

In the past, Stevens, Scalia, Thomas and Ginsburg have joined Souter in supporting a strong right to a jury trial on all sentencing factors. But their acquiescence in yesterday's ruling appeared to reflect their belief that the court's 2005 decision was entitled to respect as precedent.

Investigators from the Los Angeles Ethics Commission and the State Bar of California have launched separate inquiries related to City Atty. Rocky Delgadillo's use of city resources for personal reasons, authorities and sources said Thursday.

The inquiries come amid growing criticism from community and city leaders about Delgadillo's conduct. In recent days, the city's top prosecutor has acknowledged letting his wife drive his city-owned vehicle without a license and enlisting staff members to run personal errands and baby-sit his children.

"There are certainly concerns about the misuse of public property for private benefit," said Kathay Feng, executive director of California Common Cause. "Particularly because we are talking about a position that must maintain a high level of public integrity … we would want an investigation to make sure that integrity is there."

Nick Velasquez, a spokesman for Delgadillo, said "the city attorney is fully prepared to cooperate with any investigation."

Because such investigations are confidential, authorities from the state bar and Ethics Commission declined to confirm them.

The state bar, however, confirmed its inquiry earlier this week in a letter to a Whittier attorney who lodged a complaint about Delgadillo's alleged unethical conduct after reading articles in The Times.

"I believe in ethics," said attorney Allen P. Wilkinson, who made the complaint. "Attorneys already have a bad reputation among the public as being dishonest and I don't think that type of conduct should be tolerated in the legal profession."

Meanwhile, on Thursday, two Ethics Commission investigators met for 20 minutes with the general manager and assistant general manager of the General Services Department, which is in charge of the city's fleet of vehicles, and asked for information on the agency's policies and procedures for providing city-owned automobiles to officials and various employees.

"They were looking for general information on what the rules are, and how people can arrange to use a vehicle," said one city official familiar with the afternoon meeting.

City Councilman Dennis P. Zine said he supported an investigation. "The Ethics Commission has a responsibility when allegations like these are brought forward to investigate," Zine said. "They should investigate this. It's very embarrassing for an elected official who is a prosecutor, who enforces laws, to be involved in something like this that defies common sense."

It has been a tough week for the Delgadillo family. On Monday, the city attorney admitted that his wife was driving with a suspended license when his city-owned GMC Yukon was damaged. Michelle Delgadillo was using the car to go to her doctor's office when she backed into a pole in a parking lot. The city attorney had initially let taxpayers pay for the $1,222 repair job, but after the matter became public he decided to reimburse the city.

Delgadillo also acknowledged Monday that — unbeknownst to him — he had driven without auto insurance for about a year and his wife had done so for about two years. Then, on Wednesday, The Times disclosed that Delgadillo had periodically called on his staff members to run personal errands and baby-sit his two young sons.

Delgadillo, who makes $205,977 annually as city attorney, said his employees had done those favors on their personal time, although several sources said the chores were performed during normal business hours.

One person who won't investigate Delgadillo is Los Angeles County Dist. Atty. Steve Cooley, who has recused his office because of a potential conflict: Delgadillo has been rumored to be interested in challenging Cooley for the district attorney's job. On Thursday, Cooley's office sent a letter to state Atty. Gen. Jerry Brown saying that he would refer any allegations of wrongdoing against Delgadillo to the state for consideration.

"We believe that because of our conflict situation, any criminal inquiry that may be warranted is properly referred to your office for your consideration and any action you deem appropriate," wrote Chief Deputy Dist. Atty. John K. Spillane.

Whenever the city Ethics Commission finds evidence of criminal wrongdoing, it normally refers the matter to either the district attorney or city attorney, depending on whether the suspected violation is a felony or misdemeanor.

The guidelines set rules for judges to calculate punishment and attempt to reduce wide disparities in sentences for the same crime.

But critics of the guidelines say they often impose overly harsh sentences and take away a judge's discretion to look at the facts of the case and fit an appropriate punishment for each individual.

The ruling involved Victor Rita, who received 33 months in prison for making false statements during an investigation of illegal trafficking in machine gun kits. His sentence was at the bottom of the guideline range of 33 to 41 months.

Rita had sought a sentence lower than 33 months, based on his physical condition -- he has diabetes and other illnesses -- his likely vulnerability in prison and his military service in Vietnam and in Operation Desert Storm.

The Supreme Court upheld a U.S. appeals court's ruling that found Rita's sentence to be reasonable.

Justice Stephen Breyer said in the majority opinion that the judge in the case properly analyzed the relevant factors and gave legally sufficient reasons for the sentence.

The ruling followed up on the Supreme Court's landmark decision in 2005 that federal judges no longer were bound by the sentencing guidelines that had been in effect for nearly 20 years, but must consult them and take them into account.

Justice David Souter dissented in Thursday's decision and said he would reject the presumption of reasonableness adopted in the case. He also urged Congress to revisit the issue of guidelines.