Supplement maker NBTY in lawsuit
have filed a class action lawsuit against the New York-based
supplement maker.
The complaint alleged that at the start of the class period (22 April) NBTY announced it had experienced a "record" quarter, in which its financial results exceeded analyst expectations, causing the price of the company's stock to rise almost 5 percent.
The accusation rests on the claim that NBTY attributed the increased revenues in part to its "ability to more effectively target market its customer base." As part of the same announcement, the company apparently advised investors they were confident NBTY would continue to increase its revenue and market share.
However, it allegedly did not inform investors that the financial results were the consequence of a shift in the timing of a promotional mailing and were not attributable to any long-term improvement.
The company's results -as reported by NutraIngredientsusa.com - showed a slowdown in sales. The prosection claimed that at the start of the class period, NBTY knew, but failed to disclose, that sales at its Vitamin World stores were declining because customers were increasingly purchasing their vitamins and other health supplements at mass market outlets and not at specialty health stores such as Vitamin World.
The complaint concluded by asserting that when the actual results were disclosed to the market on 17 June, shares of NBTY common stock fell $9.51 per share, or 26 per cent, to close at $26.99 per share. But not before certain defendants had sold 727,200 shares gross proceeds of $26 million.
Martin Kounitz, a credit analyst at S&P, which rates NBTY double-B, with a negative outlook, commented that NBTY had always been "extremely forthright" in revealing information to S&P.
