The original Complaint alleges that defendants violated federal securities laws by issuing a series of materially false statements. Specifically, defendants failed to disclose the following: (i) the Company had overinvested in inventories of fall clothing, building excessive levels of in-stock inventories of seasonal merchandise that carried over into the first quarter of 2006; (ii) that the Company resorted to very aggressive promotional pricing in February and March 2006 which deeply discounted the prices of the merchandise in order to move the merchandise and make room for new seasonal merchandise; and (iii) the Company's gross profit margins were substantially reduced in February and March 2006 by reason of the inventory and pricing actions taken by defendants which caused the Company's profit margins and profits in February and March 2006 to shrink dramatically even as sales revenues increased, which represented an extreme departure from Jos. A. Bank's historical pattern.
The complaint further alleges that on or around June 8, 2006, defendants announced that net income for the first quarter of 2006 had fallen 13% even as sales revenues increased 18%. On this news, the Company's common stock fell 29%, dropping $10.72 to close at $26.40 per share on June 8, 2006.
By the Order entered on November 20, 2006, the Court granted the motion of the Massachusetts Labor Annuity Fund to Consolidate Cases and to appoint lead plaintiff and lead counsel. On February 22, 2007 lead plaintiffs filed their Consolidated Class Action Complaint alleging the company and certain officers violated sections 10b and 20 of the 1934 Securities Act.
On April 4, 2007 defendants filed their motions to dismiss in response to the Consolidated Class Action Complaint. The motion was ultimately denied on September 10, 2007. An answer to the complaint was filed by defendants, with a motion for summary judgment following on November 19, 2007. On May 1, 2008 the judge denied the summary judgment motion but allowed plaintiffs leave to amend their complaint with regard to certain aspects. Plaintiffs elected not to amend their complaint and discovery as been scheduled to conclude in October 2009.
On January 29, 2010, the lead plaintiff filed a Stipulation of Settlement. The proposed settlement is in the amount of $4 million in cash. On March 2, 2010, the settlement was preliminarily approved. The Settlement Fairness Hearing was held on July 8, 2010. On July 20, 2010, the Court entered the Final Judgment and Order of Dismissal with Prejudice. The settlement was approved and the action was dismissed with prejudice. On July 28, 2010, the Court awarded Attorney Fees in the amount of $931,816.53. The case is now closed.