Stockholders v Tommy Hilfiger Corporation
Alleged Tax Evasion Schemes and Recordkeeping Irregularities Cause Tommy Hilfiger Stock to Plummet
Several class actions have been filed against retail clothing giant Tommy Hilfiger Corporation (NYSE: TOM) and certain of its officers and directors by stockholders who purchased the company's common stock between November 3, 1999 and September 24, 2004. 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.
The complaint alleges that between late 1999 and September 24, 2004 Hilfiger improperly disguised income from its U.S. subsidiaries as buying office commissions and shifted that income to non-U.S. subsidiaries where taxes were lower. The plaintiff stockholders allege that Hilfiger evaded over one hundred million dollars of U.S. taxes using this strategy. The complaint further contends that Hilfiger improperly inflated reports of its after tax net income and earnings per share.
When news of these irregularities broke as a result of an announced federal investigation, Hilfiger stock dropped, on September 24, 2004 from $13.17 per share to $10.30 per share. The stock has continued to trend downward since that time.
