- Company Name
- PriceSmart, Inc.
- Stock Symbol
- Class Period
- October 26, 2017 to October 25, 2018
- Motion Deadline
- July 21, 2019
- Southern District of California
The complaint charges PriceSmart and certain of its current and former officers with violations of the Securities Exchange Act of 1934. PriceSmart owns and operates membership-shopping warehouse clubs throughout Central America, the Caribbean, and Colombia. The Company’s warehouse clubs sell brand name and private label consumer goods to individuals and businesses.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose that PriceSmart was not achieving its operating goals and that the Company’s internal controls over financial reporting were inadequate. Defendants also concealed from the market the true facts relating to PriceSmart’s investment of Trinidad and Tobago dollars with financial institutions, which had been improperly classified as cash and cash equivalents, materially impacting the Company’s financial statements. As a result of this information being withheld from the market, PriceSmart securities traded at artificially inflated during the Class Period, with its stock price reaching a high of more than $90 per share.
Then on October 25, 2018, the Company announced poor operating results for the fourth quarter and year ended August 31, 2018 and disclosed that certain financial statements would need to be restated to correct a balance sheet misclassification of certain assets and that defendant Jose Luis Laparte, the Company’s CEO, had abruptly resigned. On this news, the price of PriceSmart shares fell $12.41 per share, or more than 15%, to close at $69.16 per share on October 26, 2018.