NEW YORK, Dec. 4, 2003 (PRIMEZONE) -- The Law Firm of Wechsler Harwood LLP announced today that a class action lawsuit has been filed on behalf of all purchasers or acquirers of publicly traded securities of Friedman's, Inc. ("Friedman's" or the "Company") (NYSE:FRM) and formerly (Nasdaq:FRDM), between January 26, 2000 and November 17, 2003, inclusive, (the "Class Period")
The action, entitled Liu v. Friedman's Inc., et al., (index number not yet assigned), is pending in the United States District Court for the Northern District of Georgia against Friedman's, Victor M. Suglia, Bradley J. Stinn, Sterling Brinkley and Douglas Anderson. A copy of the complaint is available from the Court or can be viewed on the firm's website at www.whesq.com.
If you purchased or otherwise acquired Friedman's publicly traded securities during the Class Period, you may, no later than January 13, 2004, move to be appointed as a lead plaintiff in this class action. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood or other counsel of your choice to serve as your counsel in this action.
The complaint asserts violations of the Securities Exchange Act of 1934 and charges defendants with issuing false and misleading statements regarding Friedman's financial results and business model, resulting in the Company materially overstating its earnings for the fiscal years 2000 through 2002, and the first three quarters of 2003. The complaint claims that the earnings Friedman reported throughout the Class Period and representations concerning those results were false and misleading when made as Friedman's financial statements during the Class Period were in violation of GAAP and SEC rules. These improper practices are now the subject of a Securities and Exchange Commission investigation, as well as an investigation by the Department of Justice.
The complaint further alleges that defendants knew and failed to disclose material adverse information and misrepresented the truth about the Company, its financial performance, earnings momentum, and future business prospects, including that: (i) the Company's allowance for doubtful accounts was woefully inadequate; (ii) the Company's credit losses during the Class Period were significantly higher than its reserves and higher than defendants publicly represented; and (iii) defendants failed to properly write-off uncollectible receivables, and materially overstated Friedman's financial results by maintaining known uncollectible accounts as assets during the Class Period. As a result, Friedman's stock traded at inflated prices during the Class Period, increasing to as high as $17.50 on September 3, 2003.
On November 17, 2003, Friedman's shocked the market by announcing it was restating its financial results at least since fiscal 2000 over its accounting of bad debt, and its auditor, Ernst & Young, withdrew its audit opinion on past earnings. In response to the Company's devastating news, Friedman's stock price plummeted by approximately 60% on unusually heavy trading volume to a trading low of $7.01 per share.
The complaint also charges that the individual defendants engaged in this scheme to inflate the price of Friedman's securities in order to: (i) protect and enhance their executive positions and the substantial compensation and prestige they obtained thereby; (ii) enhance the value of their personal holdings of Friedman's securities; (iii) complete public offerings; (iv) prevent violation of the covenants in the Company's credit facility agreement and maximize the amount allowed to be borrowed by the Company under this agreement; and (v) avoid repaying millions of dollars in personal loans from the Company.
The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400
Craig Lowther, Wechsler Harwood Shareholder Relations Department: clowther@whesq.com (Ext. 257)
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca