NEW YORK, July 19, 2006 (PRIMEZONE) -- Labaton Sucharow & Rudoff LLP filed a class action lawsuit on July 19, 2006 in the United States District Court for the Southern District of New York, on behalf of persons who purchased or otherwise acquired publicly traded securities of Zale Corporation ("Zale" or the "Company") (NYSE:ZLC) between February 18, 2005 and May 5, 2006, inclusive, (the "Class Period"). The lawsuit was filed against Zale and Mary L. Forte, Mark R. Lenz, Cynthia T. Gordon and Sue E. Gove ("Defendants").
If you are a member of this class you can view a copy of the complaint and join this class action online at http://www.labaton.com/get/?case=http://www.labaton.com/get/?case=Zale .
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. Specifically, the complaint alleges that Defendants issued a series of material misrepresentations to the market which had the impact of artificially inflating the market price of Zale securities. Unbeknownst to investors, the representations in the Company's reported results of operations materially overstated Zale's net cash flows and free operating cash flows, which are important measures of the Company's cash generating abilities. In addition, the Company improperly accounted for extended service agreements, leases and accrued payroll.
On April 10, 2006, before the open of regular trading, the truth began to emerge as Zale announced that the SEC had initiated a broad investigation into many aspects of the Company's accounting, operations and disclosure practices, including Zale's accounting for extended service agreements, leases and accrued payroll, executive compensation and severance, earnings guidance, stock trading and the timing of vendor payments. In reaction to this announcement, the price of Zale stock fell from $27.80 per share on April 7, 2006 to $25.16 per share on April 10, 2006, the following trading day for a one-day loss of 11.5% on unusually heavy volume. Then on Friday, May 5, 2006, after the market closed, Zale announced that it had replaced its Chief Financial Officer, Defendant Lenz, after discovering that the Company improperly inflated its reported net cash flows and free cash flows. In response to the announcement, the price of Zale stock dropped by $0.44 per share to close at $24.18 per share on May 8, 2006, and by another $0.40 per share between May 8, 2006 and May 9, 2006, as the market continued to digest the information.
Plaintiff is represented by the law firm of Labaton Sucharow & Rudoff LLP. Labaton Sucharow is one of the country's premier national law firms that represent individual and institutional investors in class action, complex securities and corporate governance litigation. The firm has been a champion of investor rights for over 40 years and has been recognized for its reputation for excellence by the courts.
If you bought Zale securities between February 18, 2005 and May 5, 2006, inclusive, you may qualify to serve as Lead Plaintiff. Lead Plaintiff papers must be filed with the court no later than sixty days from today. If you would like to consider serving as lead plaintiff or have any questions about the lawsuit, please contact one of our representatives or Christopher Keller, Esq. at 800-321-0476.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca