Central European Distribution Corp Investors File Lawsuit Against Directors

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Company Name(s): 
Central European Distribution
Case Name: 
Central European Distribution Shareholder Derivative Action 11/23/2011
Case Status: 
Lawsuit Filed
Affected Securities
NASDAQ: CEDC
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 
11/23/2011
Summary: 

San Diego, Nov. 23, 2011 (Shareholders Foundation) -- An investor in NASDAQ: CEDC shares filed a lawsuit against directors of Central European Distribution Corp over alleged breaches of fiduciary duties.

According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties owed to investors in NASDAQ: CEDC) stocks. The lawsuit against directors over alleged breaches of fiduciary duties follows an earlier lawsuit filed by investors who purchased their shares between August 5, 2010 and February 28, 2011against Central European Distribution Corp over alleged violations of the Securities Exchange Act of 1934 by issuing materially false and misleading statements regarding the Company's business and prospects.

On March 1, 2011, Central European Distribution Corp issued a press release announcing its results for the full year 2010. The plaintiff alleges the company surprised the market and reporting a net loss from continuing operations on a U.S. Generally Accepted Accounting Principles basis for the year of $92.9 million, or $1.32 per fully diluted share, as compared to a net profit of $72.7 million, or $1.35 per fully diluted share, for the same period in 2009. Following the full year earnings announcement, so the lawsuit, defendants held a conference call with analysts and investors, wherein defendants disclosed for the first time an excise tax issue in production in Russia, where they had a dispute with authorities on an old excise stamp count, which resulted in the loss of two weeks of limited production runs, with one week having nothing produced in the middle of November, their "key selling period."

The plaintiff claims that in response to the unexpected earnings announcement in March, shares of Central European Distribution Corp (NASDAQ:CEDC) fell $8.52, or more than 37%, to close at $14.33 per share on March 1, 2011. In fact since April 2010 NASDAQ CEDC shares lost more than 90% of its value and traded in November under $3 per share.