Stockholders v Sel-Leb Marketing, Inc.
Sel-Leb Marketing Stockholders File Suit Against Company
Several class actions have been filed against budget-line health, beauty aid and cosmetic products provider Sel-Leb Marketing, Inc., (OTC BB: SELB.PK) and certain of its officers and directors by stockholders who purchased the company's common stock between April 5, 2002, and February 25, 2004. The actions claim 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.
The lawsuit alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by filing an annual report on Form 10KSB with the SEC for fiscal year 2001 that reported $443,669 in earnings, when in fact Sel-Leb incurred a loss for that year. The company and the individual defendants also allegedly made numerous positive statements about Sel-Leb's anticipated record revenues for fiscal year December 31, 2002, when in fact the company was incurring losses for that year. Sel-Leb's common stock traded as high as $4.00 per share during the applicable period. When the truth about Sel-Leb's deteriorating business condition was revealed, company shares became almost completely worthless.
Sel-Leb is primarily engaged in the distribution and marketing of consumer merchandise to retail sellers, such as mass merchandisers, discount chain stores and food, drug and electronic retailers. The company's business consists of three primary activities: (1) marketing and selling its own proprietary brands of budget-line health, beauty aid and cosmetic products, which are filled for Sel-Leb by contract fillers; (2) opportunistic purchasing and secondary sourcing, such as distributing merchandise on a wholesale basis outside of normal distribution channels to retail merchants, of a broad range of name-brand and off-brand products, such as health and beauty aids, cosmetics, fragrances, kitchen items and other household items; and (3) marketing and selling products to be promoted by celebrity spokespersons and sold to mass merchandise retailers.
