Mannatech, Inc. operates in the field of "glyconutrients" and designs and develops proprietary nutritional supplements, topical products and weight management products, sold primarily by purportedly independent sales associates and members through a network-marketing system -- commonly known as "multilevel marketing."

Several purported shareholder class action lawsuits have been filed against Mannatech and a certain officer charging the Defendants with violations of federal securities laws. Plaintiff claims Defendants issued false or misleading statements concerning the Company's business and operations, which caused Mannatech's stock price to become artificially inflated, inflicting damages on investors. The Complaint alleges Mannatech failed to adequately supervise and/or monitor the conduct of its associates, including those who maintain websites that prominently display misleading testimonials and/or falsely suggest that Mannatech products are effective in the treatment and prevention of certain specific diseases. The Complaint alleges that, unbeknownst to public investors, the true facts which Defendants knew and/or recklessly disregarded and failed to disclose to the investing public during the Class Period, included: (i) that the Company's internal controls were inadequate, and failed in several key aspects, resulting in inadequate monitoring and supervision of the Company's associates; (ii) as a consequence of Defendants' failure to supervise, Mannatech associates made false and unfounded claims concerning the efficacy of the Company's products; and (iii) as a result of the foregoing, Defendants' statements with respect to Mannatech's operations, performance and prospects were lacking in any reasonable basis when made.

The Complaint further alleges that on or around May 9, 2005, an article published in Barron's revealed the misleading nature of claims made on certain Mannatech associates' websites. This new shocked the market, causing the price of Mannatech shares to plummet more than 26 percent in one day, thereby damaging investors. The next day, May 10, 2005, Mannatech shares fell an additional 19 percent as a result of this news.

As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2007, three lawsuits were initially filed in the District of New Mexico and consolidated on December 12, 2005 into the civil action styled “In re Mannatech, Incorporated Securities Litigation.” The Mannatech Group, consisting of Mr. Austin Chang, Ms. Naomi S. Miller, Mr. John Ogden, and the Plumbers and Pipefitters Local 51 Pension Fund, has been appointed as lead Plaintiffs, Lerach Coughlin Stoia Geller Rudman & Robbins LLP has been appointed as lead Counsel and Claxton & Hill, PLLC has been appointed local Counsel, for the putative class. On January 29, 2007, the Court in the District of New Mexico granted the Company’s motion to transfer venue to the United States District Court for the Northern District of Texas, Dallas Division. On March 9, 2007, an unopposed Motion for Leave to File Amended Consolidated Class Action Complaint for Securities Fraud was filed by lead Plaintiffs for the putative class. The Amended Consolidated Complaint proposed by the lead Plaintiffs is substantively similar to the Consolidated Class Action Complaint filed on March 3, 2006. Lead Plaintiffs allege the Company violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by artificially inflating the value of the Company’s common stock by knowingly allowing independent contractors to recklessly misrepresent the efficacy of its products during the purported class period. The Amended Complaint expands the class period, as alleged in the Consolidated Class Action Complaint, to October 27, 2006, and also adds new allegations based on news reports of potential regulatory or enforcement actions by the State of Texas involving selling and promotional activities of the Company and/or its independent associates. The Company was required to answer or move to dismiss the Amended Complaint by May 21, 2007.

In a press release dated July 17, 2007, on July 12, 2007, as a result of the July 5, 2007 disclosure of the Texas Attorney General Complaint and the July 6, 2007 stock drop, Lerach Coughlin filed a Second Amended Consolidated Class Action Complaint for Securities Fraud, which included additional claims in connection with these events. The Second Amended Complaint was filed on behalf of purchasers of Mannatech common stock between the period of August 10, 2004 through July 5, 2007.

According to a press release dated March 20, 2008, Mannatech announced that the Company and Counsel for the lead Plaintiff have reached a settlement in the securities class action lawsuit styled Jonathan Crowell v. Mannatech, Inc., et al., Civil Action No. 3:07-CV-00238-K, in the United States District Court for the Northern District of Texas ("the litigation"). The litigation is the consolidation of three securities class action Complaints filed against Mannatech, and certain of its officers and directors in August and September 2005. The settlement class consists of the purchasers of Mannatech stock during the period August 10, 2004 through July 30, 2007. This settlement, which is subject to among other things preliminary and final Court approval, would resolve all the claims in the litigation. Without admitting any liability or wrongdoing of any kind, the Company has agreed to authorize payment to the Plaintiff class of $11.25 million. This settlement payment would be funded by both the Company' s insurer and the Company itself. Because the litigation is a class action, the settlement is subject to the preliminary approval of the Court as well as the Court' s final approval after notice of the terms of the settlement has been provided to all class members.

Despite the announced agreement to settle, Plaintiffs filed a Third Amended Consolidated Complaint against all Defendants on April 3, 2008.

According to a press release dated September 23, 2008, Mannatech reached a tentative settlement in the securities class action lawsuit styled "Jonathan Crowell v. Mannatech, Inc., et al., Civil Action No. 3:07 CV-00238-K," which was filed in the U.S. District Court for the Northern District of Texas, according to the Company's Aug. 11, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended June 30, 2008.

On November 19, 2008 the lead Plaintiff submitted a Stipulation of Settlement and a motion for preliminary approval of the agreement. Stated in the agreement, Defendants will pay $11,250,000 for the release of claims and Counsel will apply for fees up to 30% of the settlement fund and reimbursement of $250,000 in expenses.

On December 12, 2008 the judge preliminarily approved the proposed settlement and set a Settlement Fairness Hearing for March 10, 2009. After the Settlement Fairness Hearing adjourned, the judge entered a Final Judgment and Order of Dismissal, approving the settlement and terminating the case on March 10, 2009.