"The stock price has dropped since the company made its announcement [Monday]," said Jerome Congress, attorney for the plaintiffs. The allegations claim the company's annual reports and other documents falsely overstated the company's financial condition, such as their inventories, assets, shareholder equity, and earnings.
The class applies to shareholders who held Micro Warehouse's common stock from March 26 to September 27 of this year, a period that Congress claimed saw company insiders selling about $28 million of their shares.
The stock had been moving up from the $15 range since mid-July to around $30 at the time Micro Warehouse announced it would restate its financial results. The stock closed yesterday at 23-1/2 a share. Today's low was 22-1/2 per share in afternoon trading.
Melinda Levino, a Micro Warehouse spokeswoman, declined to comment on pending litigation. She said there have been no further determinations on restatements to its financial earnings since the announcement was made this week.
Micro Warehouse said it discovered errors in its accounting procedures and, as a result, would have to restate its results and would likely incur an $18 million after-tax charge.