Koss Corporation (NASDAQ: KOSS) Investor Securities Class Action Lawsuit 01/15/2010

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Company Name(s): 
Koss Corporation
Case Name: 
Koss Corporation Shareholder Class Action Lawsuit 01/15/2010
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NASDAQ: KOSS
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
01/16/2010
Class Period Begin: 
07/12/2005
Class Period End: 
12/21/2009
Court of Filing: 
U.S. District Court for the Eastern District of Wisconsin
Deadline To File for Lead: 
03/12/2010
Date Settled: 
07/10/2012
Settlement Amount: 
$1,000,000
Deadline to Participate in Settlement: 
08/06/2012
Settlement Notice: 
Settlement Proof: 
Summary: 

May 8, 2013 - The court ordered the authorization of the distribution of the net settlement fund.

July 10, 2012 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses, and dismissed the action with prejudice.

March 9, 2012 - The court preliminarily approved the settlement.

March 6, 2012 - Parties filed a stipulation of settlement.

July 28, 2011 - The court granted in part and denied in part the defendants' motion to dismiss.

October 25, 2010 - The defendants filed a motion to dismiss.

September 10, 2010 - The lead plaintiff filed an amended complaint.

May 13, 2010 - The lead plaintiff and lead counsel were appointed.

March 16, 2010 - A lead plaintiff motion was filed.

January 16, 2010 - An investor in shares of Koss Corporation (NASDAQ: KOSS) filed a lawsuit in the U.S.District Court for the Eastern District of Wisconsin against Koss Corporation over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between July 12, 2005 and December 21, 2009.

According to the complaint the plaintiff alleges that that Koss Corporation and certain of its current and former executive officers violated federal securities laws by issuing between July 12, 2005 and December 21, 2009 false and/or misleading statements and/or failed to disclose material information. On December 21, 2009, Koss Corporation announced that NASDAQ halted trading of Koss Corporation stock at the its request after it discovered certain unauthorized transactions at Koss Corporation, and the Board of Directors had appointed a special committee of independent directors to lead an internal investigation to determine the effect of the transactions on Koss Corporation’s financial statements. Then on December 24, 2009, Koss Corporation announced that it had discovered these “unauthorized transactions” potentially totaling as much as $31 million. As a result of this discovery, Sujata Sachdeva, the Company’s Vice President of Finance and Secretary, was terminated and two members of the Company’s accounting staff were placed on unpaid administrative leave. The company has further disclosed its shareholders should not rely on financial statements since the end of its 2005 fiscal year and that it plans restatements for at least its last three fiscal years.

According to reports, the two dismissed employees charged millions of dollars worth of merchandise to personal credit card accounts which they paid using several large wire transfers originating from a Koss Corporation bank account. The Koss Corporation’s Chief Executive Officer reportedly found several large piles of merchandise in the office of at least one of the two dismissed employees. Koss Corporation, located in Milwaukee, WI, is engaged in the design, manufacture and sale of stereo headphones and related accessory products. The Company’s products are sold through audio specialty stores, the Internet, direct mail catalogs, regional department store chains, discount department stores, military exchanges, prisons and national retailers under the Koss name and dual label. On January 11, 2009, when trading in Koss Corporation stock resumed, shares of Koss Corporation’s stock (NASDAQ: KOSS) declined $1.32 per share, approximately 24%, to close on January 11, 2010, at $4.19 per share. Koss Corporation reported on June 30, 2008 for the past 12 months a Total Revenue of $46.94million with a Net Income of $4.49million and on June 30, 2009 for the past 12 months a Total Revenue of $38.18million with a Net income of $1.98million. Shares of Koss Corporation traded recently at $5.51 per share, down from its 52weekHigh of $8.12 per share, over $10 per share in 2007, and over $14 per share in 2006.