Like the other lawsuits, this suit seeks class action status on behalf of all shareholders who purchased stock in Crocs between July 27 and October 31, 2007. The suit alleges the company and its officials are guilty of securities violations, including fraud, in their failure to alert shareholders about key information regarding Crocs' distribution problems. Those problems allegedly cost the company $30 million in the third quarter.
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According to the lawsuit, the defendants issued numerous positive press releases and financial reports that did not disclose the negative impact that seasonal conditions were having on Crocs' sales. Furthermore, the lawsuit alleges that officials did not have a reasonable basis on which to make their positive statements about Crocs and its prospects. The plaintiff further alleges that Crocs insiders knew about the non-public information and sold off around 963,000 shares for at least $64 million. Finally, the plaintiff alleges that because of the misleading statements in the months leading up to the third-quarter announcement, shares of Crocs were artificially inflated.While it is not illegal for company executives to sell their shares in a company, it is illegal for them to do so if they have insider knowledge about a company's prospects that has not been made public. So, if executives knew about a decrease in sales that would negatively affect company stock and they sold their shares before the announcement was made in order to get as high a price as possible for their stocks, they would have committed an illegal act.
Shareholders who purchased stock in Crocs while it was at artificially inflated prices may be eligible to join a lawsuit against the company and its executive to recover their losses.
