American Apparel Faces Third Shareholder Lawsuit In Two Weeks
Another shareholders' suit against troubled Los Angeles clothing maker American Apparel has been filed this week. It's the third such filing in the last two weeks by our count.
The potentially class-action suit represented by attorney Howard G. Smith claims the 280-store fashion juggernaut "violated federal securities laws by issuing material misrepresentations to the market concerning American Apparel's operations and financial performance" during the last four years.
The company has been late in filing its June financial figures with the New York Stock Exchange and has been warned it could be delisted. It's $120 million debt. And last year it lost 1,500 to 1,800 workers who couldn't prove their resident status in the United States.
Another potential class-action filing represented by the law firm of Robbins Geller Rudman & Dowd claims that shareholders were misled when the company told investors the immigration crackdown would not effect the company's performance (recently CEO Dov Charney blamed everything on the loss of workers).
A third suit represented by Johnson Bottini of San Diego claims the company was mismanaged, shareholders were misled, and the image of American Apparel has been damaged.