Investors Sue Spectrum
The law firm of Milberg Weiss Bershad & Schulman L.L.P.
(New York) filed a class-action lawsuit on Nov. 14 on behalf
of people who purchased or otherwise acquired the securities
of Spectrum Brands Inc. (Atlanta), alleging that the company
and certain of its former officers and directors issued a series
of material misrepresentations to the market during the class
period.
Filed in the U.S. District Court for the Northern District
of Georgia, the lengthy complaint alleges that representations
concerning the company’s ability to acquire and integrate
diverse brands such as United Pet Group (Cincinnati, Ohio)
and Tetra (Blacksburg, Va.), while maintaining robust sales
of its core battery products, were either untrue or that the
company recklessly disregarded its true operational and financial
condition. Unbeknownst to investors, the suit continued, a
host of undisclosed factors negatively impacted business and
caused the company to report financial results that were materially
less than the market expectations the company caused and cultivated.
At the end of the class period, the suit said, the company
was operating far below expectations and had significantly
inflated sales of its battery products during the first and
second quarters of 2005. When the company reported results
for the 2005 third quarter, its stock declined more than $8,
falling more than 20 percent.
Additionally, the company revealed that earnings for the
2005 fourth quarter would be substantially lower than the
guidance previously reported, causing stock to drop another
13 percent.. On Nov. 10, the company revised downward yet
again its earnings projection. On Nov. 14, it issued a statement
that the U.S. Attorney’s Office for the Northern District
of Georgia had initiated an investigation into results for
its third quarter and revised guidance as to earnings for
the 2005 fourth quarter and 2006 fiscal year. [February 2006
PET AGE]
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