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Case Status:    SETTLED
On or around 07/11/2008 (Date of order of final judgment)

Filing Date: July 19, 2006

Zale Corporation Is a jewelry retailer that was founded in 1924.

The original Complaint alleges that Defendants violated federal securities laws by issuing a series of materially false statements. Specifically, the representations in the Company's reported results of operations materially overstated Zale's net cash flows and free operating cash flows. In addition, the Company improperly accounted for extended service agreements, leases and accrued payroll.

The Complaint further alleges that on or around April 10, 2006, before the open of regular trading, the truth began to emerge as Zale announced that the SEC had initiated a broad investigation into many aspects of the Company's accounting, operations and disclosure practices, including Zale's accounting for extended service agreements, leases and accrued payroll, executive compensation and severance, earnings guidance, stock trading and the timing of vendor payments. In reaction to this announcement, the price of Zale stock fell from $27.80 per share on April 7, 2006 to $25.16 per share on April 10, 2006. Then on Friday, May 5, 2006, after the market closed, Zale announced that it had replaced its Chief Financial Officer, Defendant Lenz, after discovering that the Company improperly inflated its reported net cash flows and free cash flows. On this news, the price of Zale stock dropped by $0.44 per share to close at $24.18 on May 8, 2006.

On October 17, 2006, the Court entered the Order signed by U.S. District Judge Harold Baer transferring the three similar securities class action from the U.S. District Court for the Southern District of New York to the Northern District of Texas.

On October 16, 2006, the Court appointed Pipefitters Local No. 636 Defined Benefit Plan, Iron Workers Local 16 Pension Fund and Mitchel Agoos as lead Plaintiffs, and approved lead Plaintiffs' selection of co-lead and liaison Counsel. On January 29, 2007, lead Plaintiffs filed a Consolidated Class Action Complaint for Violation of the Federal Securities Laws. On March 15, 2007, the Defendants filed a motion to dismiss the Complaint. On April 30, 2007, lead Plaintiffs filed a memorandum in opposition to the motion to dismiss, and on May 21, 2007, Defendants filed a memorandum in reply.

On February 29, 2008, a Stipulation of Settlement was filed establishing a proposed settlement fund in the amount of $5,900,000 in cash. As a result of the proposed settlement, the Court denied the pending motion to dismiss. On March 19, 2008, District Court Judge David C. Godbey preliminarily approved the settlement. On July 10, 2008, the Court granted the motion for final approval of the settlement and plan of allocation and awarded attorney fees and expenses. The Court entered the Final Judgment and Order of Dismissal with Prejudice. The civil case is terminated.

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