USA: Supreme Court Won't Review AnnTaylor Lawsuit
The high court's refusal to take on the case means that AnnTaylor must continue to battle allegations the company and former executives fraudulently engaged in a scheme to inflate its stock price in 1994 by hiding excess inventory, described in the initial shareholder complaint as a "box and hold" strategy.
The case stems from a 1996 lawsuit brought by shareholders Carol Novak and Robert Nieman on behalf of all purchasers of AnnTaylor stock between February 3, 1994 and May 4, 1995.
In November 1998, a federal judge dismissed the case, saying that the plaintiffs didn't allege facts in their complaint that would have strongly indicated AnnTaylor and its officials acted fraudulently.
But in June of this year, the Second Circuit Court of Appeals vacated that decision and sent the case back for further proceedings, saying that the district judge erred in concluding that the "plaintiffs failed to plead sufficient facts to support a strong inference of fraudulent intent" and that the judge placed an "exceedingly onerous burden" on the shareholders to supply specifics, such as the names of their confidential sources.
Companies: AnnTaylor Stores
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