The original complaint charges Smith & Wesson and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Smith & Wesson, through its subsidiary, Smith & Wesson Corp., manufactures handguns in the United States. The company produces firearms, including revolvers, black powder fire arms, pistols, rifles, and handcuffs.
The complaint alleges that, during the Class Period, defendants issued statements concerning the Company's performance and prospects. As alleged in the Complain, these statements were materially false and misleading because they failed to disclose and misrepresented the following material adverse facts which were known to Defendants or recklessly disregarded by them: (i) that the market for various lines of the Company' s gun products was saturated with inventory which was causing customers to reduce orders and postpone purchases; (ii) that the Company' s reported sales figures did not represent true growth for the Company' s products but rather were simply inventory stocking transactions and as customer inventory levels increased, the Company' s sales would suffer; and (iii) based on the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company, its earnings and prospects.
On October 29, 2007, Smith & Wesson issued a press release announcing its preliminary second quarter financial results for the period ending October 31, 2007. Among other things, the Company reduced its earnings guidance for fiscal 2008 to $23.5 million, or $0.53 per share, as compared to $28.5 million, or $0.63 per share. In response to this announcement, the price of Smith & Wesson common stock plummeted from $20.09 per share to $12.12 per share on extremely heavy trading volume. Then, on December 6, 2007, Smith & Wesson issued a press release announcing its financial results for its second fiscal quarter, the period ending October 31, 2007. The Company again reduced its outlook for 2008 to $0.40 per share. In response to this announcement, on December 7, 2007, the price of Smith & Wesson common stock plummeted from $9.92 per share to $7.08 per share on extremely heavy trading volume.
On April 15, 2008, the Court granted the motions to consolidate the actions, appointed the Oklahoma Firefighters Pension and Retirement System as lead plaintiff and approved lead plaintiff’s selection of Berman DeValerio Pease Tabacco Burt & Pucillo as lead counsel. On May 30, 2008, the lead plaintiff filed a Consolidated Class Action Complaint. The defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint on August 8, 2008. On March 26, 2009, Judge Michael A. Ponsor denied the motion as to all the other defendants, but allowed the motion for one individual defendant.
On October 13, 2009, the plaintiff filed a motion to certify the class, and on May 11, 2010, Judge Ponsor certified the class. On October 29, 2010, the defendants filed a motion for summary judgment. On November 22, 2010, the plaintiffs filed a Cross-Motion For Partial Summary Judgment.
On March 25, 2011, Judge Michael A. Ponsor granted the defendants' motion for summary judgment, and denied the plaintiffs' cross motion for partial summary judgment. Judgment was entered that same day and the civil case was terminated.