Stockholders v Spear & Jackson, Inc.
Stockholder Lawsuit Filed Against Spear & Jackson Alleging “Pump-and-Dump” Scheme
Several class actions have been filed against tool manufacturer Spear & Jackson, Inc. (OTC:SJCK.OB) and certain of its officers and directors by stockholders who purchased the company's common stock between July 14, 2003, and April 15, 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 action alleges that the following adverse facts were kept from the investing public: (1) that the defendants orchestrated a "pump-and dump" scheme to manipulate the Spear & Jackson share prices by issuing false information to promote the stock to registered representatives and broker-dealers around the country; (2) that the defendants used nominee companies based in the British Virgin Islands illegally to obtain over 1.2 million shares of Spear & Jackson stock during 2002, some of which was obtained through the filing of a fraudulent Form S-8 registration statement; (3) that the company's repurchase of shares was not in compliance with applicable rules; (4) that Spear & Jackson never had any intention of making open market purchases as suggested in its January 16, 2004 release; and (5) that the company was not on track to achieve earnings of $0.50 to $0.55 per share for 2004 as reported. As a result of the defendants' false statements, Spear & Jackson's stock price traded at inflated levels during the applicable period, increasing to as high as $9.55 on July 15, 2003, at which time the company's top officers and directors allegedly sold more than $3 million worth of their own shares. On April 16, 2004, it was announced that U.S. securities regulators had sued Spear & Jackson Chief Executive Dennis Crowley, alleging he used false information to boost the company's stock price while secretly selling $3 million in shares. Spear & Jackson shares fell $0.52 to $1.85 on this news on heavy volume of trading.
If you purchased securities issued by Spear & Jackson during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by June 21, 2004. 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 your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.
