Shareholders file class action suit against Furniture Brands
August 19, 2013,
BOCA RATON, Fla. — A law firm here has filed a class action lawsuit against Furniture Brands International that alleges the company violated federal securities laws by artificially inflating its stock price.
A suit filed Aug. 16 in U.S. District Court for the Eastern District of Missouri by the law firm Saxena White P.A. of Boca Raton, Fla., seeks a jury trial to address concerns of persons that purchased shares of FBI common stock between Feb. 13 and Aug. 5.
The plaintiffs allege that the company fraudulently inflated the stock price by communicating "materially false and misleading statements," and failing to disclose material information concerning the "company's true financial condition, operation and business prospects."
Chiefly, the plaintiffs argue, the company made false or misleading statements and/or failed to disclose it was experiencing weakness in its wholesale business and that the company's trade names were carried at inflated values. The plaintiffs also allege that the company failed to disclose it was experiencing liquidity issues.
The suit also claims that the board increased company CEO Ralph Scozzafava's salary despite the company's poor performance.
The suit does mention press releases that cite quarterly performance, including sales declines and quarterly losses. However, the suit claims, the company made false and misleading statements that caused its securities to trade at artificially inflated prices during the period.
During the Feb. 13-Aug. 5 period, FBI's stock price fell from just over $7 a share to around $2 a share. The suit claims the plaintiffs have suffered significant financial damages and seeks remedies through various sections of the Securities Act of 1934.
"As a result of defendant's wrongful course of conduct, FBN shareholders have lost millions of dollars in their investment in the company," the suit said.
In response to the lawsuit, Furniture Brands spokesperson Lisa Hanly said, "We believe these allegations are without merit and we plan to vigorously defend ourselves."