A class action lawsuit has been filed against Prestige Brand Holdings, Inc. (PBH), certain of its officers and directors by stockholders who purchased the company's common stock between February 09, 2005 and July 28, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.

According to a press release dated August 3, 2005, the complaint charges Prestige, certain of its officers and directors, and other insiders with violations of the Securities Act of 1933. Prestige describes itself as a seller of "well-recognized, brand name over-the-counter drug, household cleaning and personal care products." The complaint also names as defendants Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co and J.P. Morgan Securities Inc., the lead or co-lead underwriters of the IPO.

Specifically, the complaint alleges that the prospectus (the "Prospectus") filed with the Securities and Exchange Commission ("SEC") in connection with the initial public offering of Prestige common stock, which took place on or about February 9, 2005 (the "IPO"), was materially false and misleading. The Prospectus, which forms part of the Registration Statement, became effective on or about February 9, 2005, and 32,200,000 shares of Prestige common stock were sold to the public, thereby raising approximately $515 million. Of the $515 million raised, approximately $67 million went to certain selling shareholders. Specifically, the complaint alleges that the Prospectus was materially false and misleading because it failed to disclose and misrepresented the following adverse facts, among others: (a) that demand for the Company's products was declining and certain brands, including Compound W products were failing to maintain their market position and/or initial product sales levels; (b) that the Company was planning to withdrawal several products from the market, including Comet-brand housecleaning products that had proved unsuccessful, thus further eroding the Company's revenues and market share; and (c) as a result of the foregoing, Defendants' statements and opinions concerning the Company's sales, earnings, profitability and future prospects were lacking in reasonable basis.

The complaint further alleges that on or around July 27, 2005, after the market close, Prestige announced its financial results for the quarter ended June 30, 2005. The Company reported that it experienced sales declines in each of its three business segments: OTC medicines, Household Cleaning products and Personal Care products. The Company also lowered its earning guidance for the remainder of fiscal 2005. In response to this announcement, the price of Prestige common stock declined to a low of $10.10 during trading on July 28, 2005, before closing for the day at $11.90 per share, a 40% one-day decline, on extremely heavy volume of more than 14 million shares. The July 28, 2005 closing price represented a 25% decline form the $16.00 per share offering price just five months before.

If you bought Prestige Brand Holdings, Inc. securities between February 09, 2005 and July 28, 2005, inclusive, and would like to obtain information about the lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.