Abercrombie & Fitch Class Action Lawsuit
June 2010 - A class action settlement has been reached in a class action lawsuit filed against Abercrombie & Fitch Co. on behalf of Abercrombie & Fitch shareholders who purchased shares of Abercrombie & Fitch (ANF) between June 2, 2005 and August 16, 2005, alleging that Abercrombie & Fitch misled investors with false statements and withheld adverse information, according to class action settlement news reports. The parties have agreed to settle all outstanding claims, as a class action, for $12 million, including all attorneys’ fees and other costs and expenses. The full settlement amount is to be paid by Abercrombie & Fitch’s insurers.
June 2005 - As disclosed by the Company’s FORM 10-Q for the quarterly period ended July 29, 2006, in September and October of 2005, six purported class actions were filed against A&F and other defendants in the same Court. All six cases allege claims under the federal securities laws, and seek unspecified monetary damages, as a result of a decline in the price of A&F’s Class A Common Stock in the summer of 2005. On November 1, 2005, a motion to consolidate all these purported class actions into the first-filed case was filed by some of the plaintiffs. A&F joined in that motion. On March 22, 2006, the motions to consolidate were granted, and these actions (together with the federal court derivative cases) were consolidated for purposes of motion practice, discovery and pretrial proceedings. A consolidated amended complaint was filed on August 14, 2006.
The original Complaint alleges that defendants Abercrombie and certain of its present and formers officers and/or directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period thereby artificially inflating the price of Abercrombie securities.
The Complaint alleges that Abercrombie (a) carried out a scheme to deceive the investing public; (b) made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and (c) engaged in acts, practices, and a course of business which operated as a fraud and deceit upon the purchasers of the Company's securities in an effort to maintain artificially high market prices for Abercrombie securities. More specifically, the Complaint alleges that during the class period, Abercrombie made positive public announcements about its monthly and quarterly sales results while, at the same time they did not reveal that the Company's margins, a material indicator of the Company's true financial condition, would be lower in its 2005 second fiscal quarter. In July 2005, Abercrombie's Chairman and CEO sold more than 1.6 million shares of Abercrombie common stock reaping $118 million in profits based on negative, material Company information known to him, but unknown to Plaintiff and the Class. Following the revelation of the material, undisclosed information, Abercrombie's common stock price plummeted, resulting in substantial losses to shareholders.