According to a law firm press release, a class action complaint was filed against the defendants for violations of the Securities Exchange Act of 1934.
The complaint charges The Children's Place and certain of its officers and directors with violations of the Exchange Act. The Children’s Place, through its subsidiaries, operates as a specialty retailer of merchandise for children from newborn to ten years of age. The Company designs, contracts to manufacture, and sells apparel and accessories, and other children’s-oriented merchandise under The Children’s Place and Disney Store brand names.
According to the complaint, during the Class Period, defendants issued materially false and misleading statements that misrepresented and failed to disclose: (i) that the Company was experiencing difficulties meeting certain deadlines for the remodeling and maintenance of its Disney stores and Disney was not satisfied with the Company’s performance under their agreement; (ii) that, as a result of the Company’s performance issues, the Company’s exclusive ability to contract, manufacture, source, offer and sell merchandise featuring Disney-branded characters, past, present and future was at risk of being materially altered and/or lost completely; and (iii) as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company, its prospects and revenue growth.
On August 23, 2007, the Company announced, among other things, its preliminary fiscal 2007 second quarter financial results, the Company’s revised earnings guidance and an update regarding its license agreement with the Walt Disney Company. Specifically, the Company revealed that it will no longer have an exclusive license agreement with Disney and that certain executives violated Company policies and procedures with regard to the Company's stock option granting process. In response to this announcement, shares of the Company’s common stock fell $5.59 per share, or 17%, to close at $27.43 per share, on heavy trading volume.
On December 17, 2007, an order on the consolidation of the actions as well as the appointment of lead plaintiffs and the selection of lead counsels was entered. The above mentioned order appointed the Northern Nevada Laborers Fund as lead plaintiff and the law firm of Coughlin Stoia Geller Rudman & Robbins LLP as lead counsel. On February 28, 2008, a consolidated amended complaint was filed. A motion to dismiss plaintiff’s complaint was filed by an individual on March 28, 2008. However, an opinion and order denying the defendants’ motion to dimiss was entered on July 18, 2008 by Judge Shira A. Scheindlin. Lastly, a stipulation and scheduling order was entered on August 01, 2008, which set a final pretrial conference for July 30, 2009 at 04:30 pm before Judge Shira A. Scheindlin.
On November 2, 2009, an order allocating attorney's fees and expenses was granted in this case.
On Novemebr 09, 2009, a Judgment was issued by the court in this case announcing plaintiffs' counsel is awarded attorneys' fees and costs of $1,800,000 as adequate compensation.