According to a press release dated February 22, 2008, a hearing will be held on June 19, 2008 at 9:00 a.m. regarding the proposed settlement (the "Settlement") in the above-captioned case In re Helen of Troy Limited Securities Litigation, Case No. EP-05-CA-431-H (the "Class Action"). The hearing on whether to approve the Settlement in the Class Action will be held before the Honorable Harry Lee Hudspeth, Senior United States District Judge, at the United States District Courthouse, Western District of Texas, El Paso Division, Courtroom #1, 4th Floor, 511 E. San Antonio Avenue, El Paso, Texas 79901. The purpose of the Settlement of the Class Action is to settle the claims asserted on behalf of the Class against Helen of Troy, Gerald J. Rubin, and Thomas J. Benson (collectively, the "Defendants") in exchange for a settlement amount of $4,500,000 (Four Million Five Hundred Thousand Dollars) to be distributed to Class members. At this hearing, the Court will determine: (1) whether the terms of the Settlement described in the Stipulation of Settlement ("Stipulation") dated January 15, 2007 and filed with the Court, which among other things, provides for creation of a Settlement Fund in the amount of $4,500,000, should be approved as fair, just, reasonable, and adequate; (2) whether the proposed plan to distribute the Settlement Fund to the Class ("Plan of Allocation") is fair, just, reasonable, and adequate; (3) whether the Class Action should be dismissed with prejudice as set forth in the Stipulation; and (4) whether the application of Plaintiffs' counsel in the Class Action for an award of attorneys' fees and expenses should be approved.
On May 24, 2007 the judge denied defendants' motion to dismiss the complaint.
As summarized by the Company’s FORM 10-Q for the quarterly period ended August 31, 2006, class action lawsuits have been filed and consolidated into one action against the Company, Company’s Chairman of the Board, President and Chief Executive Officer, and the Company’s Chief Financial Officer, on behalf of purchasers of publicly traded securities of the Company. On May 15, 2006 the Company filed a motion to dismiss the aforementioned lawsuit citing numerous deficiencies with the claims asserted in the lawsuit. On June 29, 2006, the plaintiffs filed with the court their opposition to the Company’s motion to dismiss. On July 17, 2006 the Company filed a reply rebutting the plaintiffs’ June 29th opposition.
The original complaint alleges defendants, Helen of Troy, Ltd., its Chief Executive Officer, and its Chief Financial Officer, violated sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5, by issuing a series of material misrepresentations to the market during the Class Period.
The complaint alleges that Defendants engaged in a scheme to defraud shareholders through the issuance of positive earnings guidance intended to artificially inflate Company stock for which their was no legitimate support. Guidance for 2006 was announced as part of the fiscal third quarter of 2005 results, the inflation of which mislead the investing public. Immediately following this increase in the stock price to its class period high, Defendant Rubin sold almost 400,000 shares at its peak price of $33.00 per share- netting proceeds of almost $13 million on the improper guidance. On October 11, 2005, the Company substantially lowered its unattainable guidance for 2006 and reported a year over year decline in revenues during its second quarter. On this news, the stock lost 21%, falling to $15.55 per share on a volume of 4.4 million shares - more than 15 times its daily average.