Bare Escentuals investors file class-action suit
This article was originally published in The Rose Sheet
Executive Summary
San Francisco-based firm made false and misleading statements regarding sales and financial performance, resulting in shareholders suffering "hundreds of millions" of dollars in damages, a complaint filed in U.S. District Court for the Northern District of California Aug. 25 alleges. Filed by Scott+Scott LLP, the complaint alleges that "a significant portion" of the firm's stellar infomercial sales revenues were dependent upon "unwittingly" signing up customers for club deals in which their credit cards were billed for multiple shipments beyond initial orders without their knowledge or consent, according to the complaint. The firm's image was diluted as distributors sold products through discounters such as Costco and efforts to revitalize infomercial sales were failing, which the complaint says was not disclosed to shareholders - leading to artificially inflated stock prices from Sept. 28, 2006 through May 30, 2007. A similar suit by the firm's shareholders was also filed in July (1"The Rose Sheet" July 27, 2009)