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Twinlab Settling Class Action Suits for $26 MillionTwinlab Settling Class Action Suits for $26 Million

March 12, 2001

1 Min Read
Twinlab Settling Class Action Suits for $26 Million

HAUPPAUGE, N.Y.--A series of class action lawsuits against Twinlab Corp. (NASDAQ:TWLB) for securities fraud has ended with the company agreeing to pay $26 million to the shareholders involved. The agreement is subject to court approval, and all monies will be paid by Twinlab's insurance.

The suits charged Twinlab with securities fraud, and were similar to ones the company faced in late 1998 following its acquisition of PR Nutrition. The catalyst for the most recent suits began Nov. 15, when Twinlab announced that it was unable to file its Form 10-Q for the quarter ended Sept. 20 in a timely manner to the Securities and Exchange Commission (SEC). At this time, Twinlab also disclosed that it would adjust its inventory down by approximately $16 million for "missing" and "obsolete" inventory. (For the story, visit www.naturalproductsinsider.com/hotnews/0bh28162012.html)

The class action suit stated that Twinlab violated federal security laws by making "false and misleading" statements in press releases and filings with the SEC. The complaint also alleged that Twinlab continued to promote the company's ability to achieve expected sales, despite experiencing a continued decrease in demand and the "obsolescence" of certain products.

According to the complaint, Twinlab and certain of its officers inflated the company's stock price during the Class Period due to overstating inventory and not accounting for obsolete inventory. "[W]hile we vigorously deny any wrongdoing, we believed it best to put these lawsuits behind us and move on," a Twinlab spokesperson said in a company release. For more information, visit www.twinlab.com or www.nasdaq.com and conduct a keyword search.

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