Tile Shop Hldgs, Inc. (NASDAQ:TTS) Investor Lawsuit Against Certain Directors Concerning Alleged Breaches Of Fiduciary Duties Filed

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Company Name(s): 
Tile Shop Holdings
Case Name: 
Tile Shop Holdings Shareholder Derivative Lawsuit 10/06/2016
Case Status: 
Lawsuit Filed
Affected Securities
NASDAQ: TTS
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 
10/06/2016
Summary: 

October 12, 2016 (Shareholders Foundation) - An investor in shares of Tile Shop Hldgs, Inc. (NASDAQ:TTS) filed a lawsuit against certain directors at Tile Shop Holdings over alleged breaches of fiduciary duties.

The plaintiff alleges that the defendants breached their fiduciary duties by engaging in allegedly conflicted relationships with suppliers that led Tile Shop Hldgs, Inc to sell lead-contaminated tile products. The plaintiff claims that certain board members raised more than $100 million through secondary stock sales while they knowingly allowed Tile Shop Hldgs, Inc to deal with a Chinese supplier through one director’s relatives and purchased and resold products with extremely high levels of lead.

On November 14, 2013, a report was published that alleged that Tile Shop Hldgs, Inc. has greatly exaggerated its true financial performance, that Tile Shop Hldgs, Inc. failed to disclose Beijing Pingxiu as a material related party supplier, that Tile Shop Hldgs, Inc. uses Beijing Pingxiu to overstate inventories, understate cost of sales and overstate gross profits, that Tile Shop Hldgs, Inc. purchases goods from Beijing Pingxiu at or near cost to allow Tile Shop Hldgs, Inc. to achieve an artificial cost advantage, and that Tile Shop Hldgs, Inc. overstates earnings.

On November 15, 2013, a lawsuit was filed against Tile Shop Hldgs, Inc over alleged securities laws violations. The plaintiff alleged that Tile Shop Hldgs failed to disclose that one of its largest suppliers, Beijing Pingxiu, is an undisclosed related company secretly controlled by Fumitake Nishi, the brother-in-law of the Company’s CEO and a Tile Shop Hldgs employee.