National Beverage Corp.
- Company Name
- National Beverage Corp.
- Stock Symbol
- Class Period
- July 17, 2014 to July 3, 2018
- Motion Deadline
- September 15, 2018
- Southern District of Florida
The complaint charges National Beverage and certain of its officers with violations of the Securities Exchange Act of 1934. National Beverage, through its subsidiaries, develops, produces, markets and sells a portfolio of flavored beverage products in North America and internationally.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business and operations. Specifically, defendants made false and misleading statements and/or failed to disclose that National Beverage’s sales claims and the purported “proprietary techniques” underlying those claims lacked a verifiable basis, and that National Beverage’s Chairman and Chief Executive Officer, defendant Nick A. Caporella, had engaged in a pattern of sexual misconduct between 2014 and 2016. As a result of defendants’ false statements and/or omissions, National Beverage shares traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $120 per share.
On May 4, 2017, National Beverage issued a press release stating that it “employs methods that no other company” uses and “utilize[s] two proprietary techniques to magnify these measures,” which “creates growth never before thought possible.”
On December 8, 2017, National Beverage issued a press release announcing its financial and operating results for the period ended October 28, 2017. Notwithstanding the Company’s representations in its May 2017 press release that it was “creat[ing] growth never before thought possible,” analyst Laurent Grandet of Credit Suisse assigned an “underperform” rating to the Company’s stock. Grandet noted that National Beverage’s business was driven “almost entirely” by the success of its LaCroix sparkling water brand, the growth trajectory of which was in fact slowing. That same day, Maxim analyst Anthony Vendetti reiterated a “sell” recommendation for National Beverage stock, noting that its “numerous weak brands and opaque financial reporting” made its sale “highly unlikely.” On this news, the price of National Beverage stock fell $11.91 per share, or over 10%, to close at $100.84 per share on December 8, 2017.
On June 26, 2018, The Wall Street Journal published an article, entitled “The SEC Has Had Its Own Questions About LaCroix,” reporting that National Beverage had “declined to provide” the SEC “with requested sales figures to clarify [its] sales claims” following a letter from the SEC in January 2018 regarding what Caporella had meant when “he wrote [in May 2017] that the company had ‘magnified’ two proprietary sales metrics to create ‘growth never before thought possible.’” On this news, the price of National Beverage stock fell $9.75 per share, or nearly 9%, to close at $100.19 per share on June 27, 2018.
Then on July 3, 2018, The Wall Street Journal published an article entitled “Billionaire Behind LaCroix Accused of Improper Touching by Two Pilots.” The article reported, in part, that “[t]wo pilots have filed lawsuits alleging sexual harassment[,] . . . claiming 82-year-old Nick A. Caporella inappropriately touched them on multiple trips while they were flying with him in the cockpit of his business jet.” The article stated that the lawsuits claim “the unwanted touching occurred on more than 30 trips from 2014 to 2016,” and that when reached by phone, one of the pilots asserted that he “stands by his allegations ‘100%’” and that the touching was “‘definitely inappropriate.’” On this news, the price of National Beverage stock fell $2.90 per share, or over 2.5%, over the following two trading days, to close at $107.04 per share on July 6, 2018.