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Case Status:    SETTLED
On or around 11/19/2010 (Date of order of final judgment)

Filing Date: May 01, 2003

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between June 28, 1998 and April 9, 2003, thereby artificially inflating the price of Allou securities. The Complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's financial results. In particular, the Complaint alleges: (a) that Allou was materially overstating its accounts receivables by at least $78 million, thereby overstating its revenues and earnings; (b) that Allou was materially overstating its inventory, thereby overstating its net worth; and (c) as a result of the foregoing, Allou's financial statements were not prepared in accordance with GAAP and were therefore materially false and misleading. On April 9, 2003, Allou announced that "its lenders have filed an involuntary petition for bankruptcy in the Eastern District of New York under the provisions of chapter 11, title 11, of the United States Code." Following this news, on April 9, 2003, AMEX suspended trading in Allou's common stock. Thereafter, press reports revealed that an outside restructuring expert that had been retained to run Allou discovered, among other things, that "only $30 million of $108 million in accounts receivable reported by Allou to its banks seemed to be valid." Furthermore, on April 24, 2003, Allou announced that it "believes that the levels of assets collateralizing loans were substantially overstated in recent reports submitted by the Company to its senior lenders. The preliminary results of the Company's investigation indicate that inventory was overstated by approximately $35,000,000 and that accounts receivable may be overstated by $75,000,000 to $80,000,000, for a total overstatement of $110,000,000 to $115,000,000. The Company has retained a forensic accounting firm to assist with the continuing investigation of this matter."

NOTE: Due to bankruptcy, Allou Healthcare is not named a defendant in the litigation.

As summarized by the docket, on July 27, 2003, the Court entered the Order consolidating all related cases under docket number 03-CV-2111. On September 24, 2003, the Court entered the Stipulation and Order appointing lead plaintiffs and approving lead plaintiffs’ selection of lead counsel. On December 15, 2003, the plaintiffs filed a Consolidated Amended Class Action Complaint, and on February 13, 2004, the defendants responded by filing various motions to dismiss. On September 20, 2004, the Court entered the Memorandum and Order granting the defendants’ motions to dismiss the Consolidated Amended Class Action Complaint with leave to amend. On October 18, 2004, the plaintiffs filed a Second Consolidated Amended Class Action Complaint, and on December 10, 2004, the defendants responded by filing motions to dismiss. On September 20, 2005, the Court entered the Memorandum and Order granting in part and denying in part the defendants’ motions to dismiss. On October 17, 2005, the plaintiff filed a motion for reconsideration from the September 20, 2005 Order. On August 17, 2006, the Court entered the Order granting the plaintiff’s motion for preliminary approval of the class action settlement. Further that day, the Court entered the Order withdrawing the plaintiff’s pending motion for reconsideration and granted plaintiffs 30 days to file a Third Consolidated Amended Class Action Complaint. On September 18, 2006, the plaintiff filed a Third Amended Consolidated Complaint against the remaining defendants.

According to a press release dated September 7, 2006, a hearing will be held on October 18, 2006, at 11:00 a.m., before the Honorable Joanna Seybert, United States District Judge, at the United States District Court for the eastern district of New York, Long Island Courthouse, 100 Federal Plaza, Central Islip, New York, for the purpose of determining whether, among other things: (1) the proposed settlement of the Action as to the Outside Director Defendants for Three Hundred Thousand Dollars ($300,000) and certain other consideration should be approved by the Court as fair, reasonable and adequate and (2) a final judgment of dismissal with prejudice as to the Outside Director Defendants should be entered pursuant to the terms of the Stipulation.

On October 19, 2006, the Court entered the Order and Final Judgment and Dismissal approving the partial settlement and dismissing the action in its entirety as to the Outside Director Defendants: Stuart Glasser, Jeffrey Berg and Sol Naimark. On November 20, 2006, the remaining defendants filed motions to dismiss the Third Consolidated Amended Class Action Complaint. The motions to dismiss are currently pending before the Court.

On September 30, 2007, the judge granted in part and denied in part the auditor defendants' motions to dismiss the Third Consolidated Amended Class Action Complaint. Accordingly, any claims against Mayer Rispler concerning the 2001 and 2002 Audits and against Andersen concerning the 2002 Audits are dismissed with prejudice.

On October 6, 2008, the plaintiff filed a motion to certify the class. The parties soon engaged in the discovery phase.

In March 25, 2009, a motion to voluntary dismiss one of the individual defendants was filed. The motion was granted in June 2009.

On August 10, 2009, a motion for preliminary approval of settlement with defendant Mayer Rispler & Company, P.C., was filed. The motion was approved on August 21, 2009.

According to a press release dated September 15, 2009, Counsel for Lead Plaintiffs has announced to all Persons who purchased or acquired the Class A common stock of Allou Health & Beauty Care, Inc. during the period from June 22, 1998 through and including April 9, 2003 that the Lead Plaintiffs in the Action Barry Blank, on behalf of himself and all others similarly situated, against Victor Jacobs, et al., Civil Action No. 03-CV-2353 (Consolidated No. 03-CV-2111), have entered into a Stipulation of Settlement (the "Stipulation") with Mayer Rispler & Company, P.C. ("Mayer Rispler") as further defined in the Stipulation to resolve the issues raised in the Action as to Mayer Rispler (the "Settlement"). Counsel for Lead Plaintiffs has further announced that pursuant to an Order of the United States District Court for the Eastern District of New York dated August 21, 2009, a hearing will be held on November 16, 2009, at 10:00 a.m., before the Honorable Joanna Seybert, United States District Judge, at the United States District Court for the Eastern District of New York, Long Island Courthouse, 100 Federal Plaza, Central Islip, New York 11722-4438, for the purpose of determining whether, among other things: (1) the Settlement of the Action as to Mayer Rispler for Two Hundred Fifty Thousand Dollars ($250,000) and certain other consideration should be approved by the Court as fair, reasonable and adequate and (2) a final judgment of dismissal with prejudice as to Mayer Rispler should be entered pursuant to the terms of the Stipulation. If you meet the definition of the Settlement Class as set forth above and are not a Defendant, an officer or director of Allou, or a member of their immediate families or their successors, heirs, or legal representatives, your rights may be affected by the Settlement of the Action.

On September 30, 2009, the Court entered the order denying the motion for class certification without prejudice, and with leave to renew. According to the Order, the plaintiffs may put forth alternate proposed lead plaintiffs within sixty days of the issuance of this Memorandum & Order.

On November 16, 2009, the court approved the $250,000 settlement as to Defendant Mayer Rispler & Company, P.C., and dismissed the action with prejudice.

On December 16, 2009, a motion to certify the class was filed.

In February and July 2010, motions for preliminary approval were filed. The proposed Arthur Andersen LLP settlement is in the amount of $500,000, and the proposed KPMG settlement is in the amount of $700,000. On August 18, 2010, the Court preliminarily approves the Andersen Stipulation and the KPMG Stipulation, including the releases contained therein, and the Andersen Settlement and the KPMG Settlement as being fair, reasonable, and adequate to the Settlement Class. The Settlement Hearing shall be held on November 19, 2010 at 11:30AM before the Honorable Joanna Seybert.

On November 19, 2010, the Court entered the Order and Final Judgment and Dismissal as to Arthur Andersen LLP, and KPMG LLP. The settlement, plan of allocation, and attorney's fees and expenses were approved. The action is now dismissed with prejudice.

COMPANY INFORMATION:

Sector: Consumer Non-Cyclical
Industry: Personal & Household Products
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: ALU
Company Market: American SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: E.D. New York
DOCKET #: 03-CV-02111
JUDGE: Hon. Joanna Seybert
DATE FILED: 05/01/2003
CLASS PERIOD START: 07/03/2002
CLASS PERIOD END: 04/09/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Wechsler Harwood LLP
    488 Madison Avenue 8th Floor, Wechsler Harwood LLP, NY 10022
    212.935.7400 · info@whhf.com
No Document Title Filing Date
COURT: E.D. New York
DOCKET #: 03-CV-02111
JUDGE: Hon. Joanna Seybert
DATE FILED: 09/18/2006
CLASS PERIOD START: 06/21/2000
CLASS PERIOD END: 04/09/2003
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Abbey Spanier Rodd Abrams & Paradis, LLP (New York)
    212 East 39th Street, Abbey Spanier Rodd Abrams & Paradis, LLP (New York), NY 10016
    212-889-3700 212-684-519 · info@abbeyspanier.com
No Document Title Filing Date
No Document Title Filing Date