Best Buy Company, Inc. is an American multinational consumer electronics retailer.

The action charges that Defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period, statements which had the effect of artificially inflating the market price of the Company's securities.

The 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 January 9, 2002 and August 7, 2002, thereby artificially inflating the price of Best Buy common stock. The Complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (a) that Best Buy's mall-based Sam Goody stores (acquired as part of its acquisition of Musicland) were performing worse than Best Buy's expectations, requiring that Best Buy shrink the sizes of such Sam Goody stores and close some Sam Goody stores altogether; (b) that Best Buy's "remerchandising" of the Sam Goody stores was failing badly, materially depressing Best Buy's operations and earnings; (c) based on the foregoing, the Musicland acquisition was a failure as the Company was saddled with a money- losing chain of stores; (d) that Best Buy was experiencing growing competition from mass discounters such as Wal-Mart, which was devoting more advertising to electronics to increase consumer awareness of its presence in the category and materially impacting Best Buy's profit margins; (e) that Best Buy's strategy of capital expenditures to enhance the high-tech look of their stores and raising the service level was not yielding expected increases in revenues; and (f) that, as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company and their earnings projections.

The Complaint further alleges that on August 8, 2002, Best Buy issued a press release announcing that it was lowering its earnings outlook for its second fiscal quarter to a range of 17 to 21 cents per diluted share, compared with prior guidance of 30 to 32 cents per diluted share. In response to this announcement, the price of Best Buy common stock declined sharply, falling from $30.80 per share on August 7, 2002 to $19.55 per share on August 8, 2002, or a one-day decline of more than 36%. During the Class Period, prior to the disclosure of the true facts about the Company, Best Buy insiders sold more than $35 million of their personally held Best Buy common stock to the unsuspecting market and the Company completed a debt offering raising hundreds of millions of dollars.

According to a press release dated May 9, 2005, Plaintiffs suing Best Buy in a class securities fraud litigation failed to meet the heightened pleading requirements of the Private Securities Litigation Reform Act, the U.S. District Court for the District of Minnesota held April 12, dismissing the Plaintiffs' allegations that the Company made false and misleading statements about an acquisition (In re Best Buy Inc. Securities Litigation, D. Minn., Civ. NO. 03-6193 ADM/AJB, 4/12/05). The court agreed with the Defendants that the Plaintiffs' claims were "conclusory allegations not grounded in specific facts," and did not meet the particularity requirements for pleading a claim under Section 10(b) of the 1934 Securities Exchange Act and Rule 10b-5. The court also refused the Plaintiffs' request for leave to amend.