Wet Seal Defendant in Shareholder Lawsuit
A class-action lawsuit filed Aug. 26 charged The Wet Seal Inc.’s executives with misleading shareholders regarding the company’s prospects in order to inflate stock prices.
Bala Cynwyd, Penn.–based law firm Schiffrin & Barroway LLP filed the suit in the Central District of the U.S. District Court. The suit alleges that Peter D. Whitford, chief executive officer of Wet Seal; Joseph E. Deckop, executive vice president; and Irving Teitelbaum, former chairman of the board, knowingly made false statements about the health of the company based in Foothill Ranch, Calif.
The lawsuit by stockholders alleged that the executives failed to state that their strategic plans, based on the success of their Backto- School clothes, “were weakening the company’s corporate standing, and due to poor management, was a complete and total disaster that was leading the company into financial ruin.”
A host of other law firms filed similar suits against the juniors retailer recently. They include Milberg Weiss Bershad & Shulman LLP and Murray, Frank & Sailer LLP, both based in New York.
Wet Seal representative Helen Rotherham said the company had no comment on the case. Schiffrin & Barroway specializes in securities class actions against companies including Tyco International Ltd. and the Tenet Healthcare Corp.
Wet Seal announced a net loss of $102 million for the second quarter, which ended July 31. Same-store sales in the second quarter declined 10.9 percent. —Andrew Asch
