The law firm of Milberg Weiss Bershad & Schulman LLP has filed a class action lawsuit on behalf of all persons who purchased or acquired the securities of Helen of Troy, Ltd. between Oct. 12, 2004 through Oct. 10, 2005.
The action is pending in the U.S. District Court for the Western District of Texas, El Paso Division, against Helen of Troy, the company's CEO, Gerald J. Rubin, and its chief financial officer, Thomas J. Benson.
The complaint alleges that the company schemed to defraud shareholders through the issuance of positive earnings guidance intended to artificially inflate its stock for which, according to the lawsuit, was no legitimate support.
The lawsuit says Helen of Troy's guidance for 2006 was announced as part of the fiscal third quarter of 2005 results and the inflation mislead the investing public. Immediately following this increase in the stock price to its class period high, Rubin sold almost 400,000 shares at its peak price of U.S. $33.00 per share -- netting proceeds of almost $13 million on the improper guidance.
According to the suit, on Oct. 11, 2005, the company substantially lowered its unattainable guidance for 2006 and reported a year-over-year decline in revenues during its second quarter. On this news, the stock lost 21 percent, falling to $15.55 per share on a volume of 4.4 million shares -- more than 15 times its daily average.
The suit says if anyone purchased or otherwise acquired the securities of Helen of Troy. between Oct. 12, 2004, through Oct. 10, 2005, inclusive, and sustained damages, they may request to be appointed lead plaintiff no later than Jan. 23, 2006. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.
In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff."
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