NexCen Brands Inc (NASDAQ: NEXC) Investor Securities Class Action Lawsuit 05/28/2008

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Company Name(s): 
NexCen Brands
Case Name: 
NexCen Brands Inc Shareholder Class Action Lawsuit 05/28/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NASDAQ: NEXC
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
05/28/2008
Class Period Begin: 
03/13/2007
Class Period End: 
05/18/2008
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
07/28/2008
Date Settled: 
12/05/2011
Settlement Amount: 
$4,000,000
Deadline to Participate in Settlement: 
01/31/2012
Summary: 

December 5, 2011 - 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.

December 2, 2011 - The court held a final settlement hearing.

July 5, 2011 - The court preliminarily approved the settlement.

June 10, 2011 - Parties filed stipulation of settlement.

February 2, 2011 - The court denied the defendants' motion to dismiss.

October 8, 2009 - Defendants filed a motion to dismiss.

August 24, 2009 - The lead plaintiff filed an amended consolidated complaint on behalf of investors who purchased NEXC common shares between March 13, 2007 and May 19, 2008. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between March 13, 2007 and May 19, 2008.

April 23, 2009 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

July 28, 2008 - Lead plaintiff motions were filed.

May 28, 2008 - An investor in shares of NexCen Brands Inc (NASDAQ: NEXC) filed a lawsuit in the U.S. District Court for the Southern District of New York against NexCen Brands Inc over alleged violations of Federal Securities Laws.

According to the complaint the plaintiff charges NexCen Brands Inc and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that between March 10, 2007 and May 19, 2008 defendant issued materially false and misleading statements regarding NexCen Brands Inc's business and financial results.

The complaint alleges that, during the Class Period, defendants issued a series of materially false and misleading statements that misrepresented and failed to disclose: (i) that NexCen Brands Inc was able to finance a portion of the Great American Cookies acquisition by agreeing to an accelerated-redemption feature, which would force NexCen Brands Inc to pay back half of its borrowing by a certain date; (ii) that NexCen Brands Inc was unable to comply with this accelerated-redemption feature, which would reduce the amount of cash available to NexCen Brands Inc; (iii) that NexCen Brands Inc had no reasonable basis for its earnings guidance for fiscal 2008; and (iv) as a result of the foregoing, NexCen Brands Inc’s ability to continue as a going concern was in serious doubt.

Then, on May 19, 2008, NexCen Brands Inc announced that it “expects to amend NexCen Brands Inc’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.” NexCen Brands Inc also stated that its prior financial guidance for 2008 “is no longer applicable.” Moreover, NexCen Brands Inc revealed that it “is actively exploring all strategic alternatives to enhance its liquidity, including potential capital market transactions, the possible sale of one or more of its businesses, and discussions with NexCen Brands Inc’s lender.” Upon this news, shares of NexCen Brands Inc’s (NASDAQ: NEXC) stock fell $1.95 per share, or 77%, to close at $0.58 per share, on heavy trading volume.

The defendants denied that there was anything improper about the information NexCen Brands Inc or members of its senior management team provided to investors, and deny any wrongdoing whatsoever. Based on his expert’s analysis, lead plaintiff believes that, if he prevailed on all the claims on behalf of the Class and the Court accepted his theory of damages, the Class would recover up to approximately $1.95 per damaged NexCen Brands Inc share, before deductions for fees and expenses and assuming that the full amount of the judgment was collected. Defendants believe that, if this case proceeded they would win every claim, and lead plaintiff and the Class would recover nothing. Defendants deny the allegations in the lawsuit and deny any wrongdoing.

NexCen Brands Inc operates as a brand management and franchising company in the United States and internationally. NexCen Brands Inc owns, licenses, franchises, and markets a portfolio of brands, including Bill Blass, Waverly, The Athlete’s Foot, Shoebox New York, Great American Cookies, MaggieMoo’s, Marble Slab Creamery, Pretzel Time, and Pretzelmaker.