PHILADELPHIA, April 2, 2003 (PRIMEZONE) -- Terry D. Goldberg & Associates today announced that they have filed, in conjunction with Co-counsel, a securities class action lawsuit in the United States District Court for the Northern District of Georgia on behalf of investors who purchased or otherwise acquired the securities of AFC Enterprises, Inc., ("AFC" or the "Company") (Nasdaq:AFCE) between March 2, 2001 and March 24, 2003 (the "Class Period"). The suit is brought against AFC, Frank J. Bellati (CEO), and Gerald J. Wilkins (CFO). A complaint is available from the Court or can be emailed to you upon request.
The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between March 2, 2001 and March 24, 2003, thereby artificially inflating the price of AFC securities.
According to the complaint, the Company's Class Period statements were materially false and misleading because the press releases and SEC filings issued during the Class Period failed to reveal that AFC inflated its operating results by: (1) improperly accounting for the sale of corporate-owned stores to franchisees; (2) improperly accounting for the value of certain long-lived assets; (3) understating advertising costs; and (4) improperly accounting for inventory at the Company's Seattle Coffee Company division.
As a result of the Company's fraudulent accounting, AFC's financial statements published during the Class Period were not prepared in accordance with Generally Accepted Accounting Principles and, therefore, it was not true that the Company's financial statements were a "fair presentation" of the Company's financial position. Indeed, by announcing its intention to restate its financial statements, AFC has admitted that its prior financial statements were materially false and misleading when issued.
On March 24, 2003, after the market closed, AFC shocked the market by announcing that it would be restating its financial statements for fiscal year 2001 and the first three quarters of 2002. The Company also reported that it was examining whether or not its financial statements for fiscal year 2000 should be restated. In response to this negative announcement the price of AFC common stock dropped by over 20% on extremely heavy trading volume. AFC insiders privy to the Company's fraudulent accounting practices did not share investors' losses. In a December 2001 public offering, AFC insiders unloaded 7,000,000 shares of their holdings at $23 per share . Indeed, during the Class Period, defendants and other Company insiders cashed out at prices as high as $34 per share, reaping profits of over $30 million.
The deadline to file lead plaintiff papers, for those class members wishing to serve in this capacity, is May 27, 2003. No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased the stock listed above during the Class Period, you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice.
If you were a purchaser of these securities between March 2, 2001 and March 24, 2003 and want to discuss your legal rights, you may call Terry D. Goldberg, Esquire at 215-354-9100 , who will, without obligation or cost to you, attempt to answer your questions. You may also contact us by e-mail at NO1PIGUY@AOL.COM.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca