According to a press release dated March 23, 2011, Kid Brands and certain of its officers and directors are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934.
On March 15, 2011, Kid Brands issued a release announcing the termination of two high-level executives at its LaJobi subsidiary and admitting to a violation of United States Customs laws. The release further explained:
"The Board’s investigation has found instances at LaJobi in which incorrect import duties were applied on certain wooden furniture imported from vendors in China, resulting in a violation of anti-dumping regulations. On the basis of the investigation, the Board concluded that there was misconduct involved on the part of certain LaJobi employees in connection with the incorrect payment of duties, including misidentifying the manufacturer and shipper of products. The ongoing investigation is also focusing on certain of LaJobi’s business and staffing practices in Asia ...
The Company currently estimates that it will incur costs of approximately $7 million relating to customs duty owed and may be assessed a penalty of up to 1x customs duty by U.S. Customs as well as possibly being subject to assessment for additional duties on other items."
As a result of the foregoing disclosure, Kid Brands’ stock plummeted from a closing price of $9.24 per share on March 14, 2011 to a close of $6.91 per share on March 15, 2011, a decline of over 25%, after experiencing an intra-day low of $6.57 per share, on heavy trading volume.
On July 26, 2011, the Court issued an order appointing Shah Rahman lead plaintiff and approving Kahn Swick & Foti, LLC as lead counsel.
On September 26, 2011, plaintiffs filed an amended complaint.
On March 8, 2012, the Court issued an order granting Defendants' Motion to Dismiss Plaintiff's Amended Complaint without prejudice; Plaintiff was given leave to file an amended complaint within 60 days. On May 7, 2012, plaintiffs filed a second amended complaint.
On October 16, 2012, the Court issued an Order dismissing the Plaintiff's Complaint with prejudice.