Zale Corp. has been named in seven class action lawsuits filed between July 19 and July 21 for alleged violations of federal Securities and Exchange Commission law.
The suits are filed by law firms in Pennsylvania, Maryland, Oklahoma, New York, Ohio, and Connecticut on behalf of shareholders who purchased Zale Corp. stock between Feb. 18, 2005 and May 5, 2006.
David H. Sternblitz, Zale Corp. vice president and treasurer, said the company would “vigorously defend itself” against the legal actions and that they had “no merit.”
Named as defendants are Zale Corp., plus former Zale president and chief executive officer Mary Forte, who resigned in January after the company posted disappointing financial results; Sue Gove, former chief operating officer, who resigned in March; Mark R. Lenz, the former chief financial officer, who in May was put on indefinite administrative leave until his contract ends July 31; and Cynthia T. Gordon, Zale Corp.’s current senior vice president, controller.
The class action lawsuits were filed in the United States District Court for the Southern District of New York.
Under federal securities law, these related suits will be consolidated into a single unified one with a lead attorney and a lead plaintiff in September, 60 days after the first class action filing on July 19.
The complaints allege that Zale Corp. and the former and current officials violated SEC laws by supposedly issuing misleading statements to the market about Zale’s financial performance between Feb. 18, 2005 and May 5, which allegedly had the effect of “artificially inflating” the market price of Zale stock.
On Apr. 10, Zale announced that the SEC had begun a non-public investigation into its accounting, operations and disclosure practices, causing Zale’s stock price top drop to $25.16 (from $27.80 on Apr. 7). On May 5, 2006, after the market closed, Zale announced that it had put Lenz on indefinite administrative leave, and the price of Zale stock dropped to about $24.18 on May 8.