Tuesday, October 19, 2010

American Apparel Sued for Securities Fraud

Here is a securties fraud class action that might be of interest to ImmigrationProf readers.  A class action lawsuit was filed in August in the United States District Court for the Central District of California on behalf of all persons who purchased American Apparel securities during the period from December 20, 2006, to August 17, 2010 by Milberg LLP. The complaint charges American Apparel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements about the Company's hiring practices and their effects on the Company's financial performance. On September 3, 2009, the company announced that it was forced to dismiss 1600 employees who were unable to prove lawful immigration status. Those terminations came two months after the company announced that the U.S. Immigration and Customs Enforcement agency charged that 1,600 of American Apparel's workers were undocumented. On August 17, 2010, the Company issued a press release announcing that it expected to report a loss of $5 million to $7 million in the second quarter of 2010 on net sales of $132 million to $143 million.  American Apparel's stock dropped approximately 41% on this news.

KJ

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