SOURCE: Brower Piven, A Professional Corporation

August 30, 2010 11:23 ET

Brower Piven Encourages Investors Who Have Substantial Financial Losses From Investment in American Apparel, Inc. to Inquire About the Lead Plaintiff Position in Securities Fraud Class Action Lawsuit Before the October 25, 2010 Lead Plaintiff Deadline

STEVENSON, MD--(Marketwire - August 30, 2010) - Brower Piven, A Professional Corporation announces that a class action lawsuit has been commenced in the United States District Court for the Central District of California on behalf of purchasers of the common stock of American Apparel, Inc. ("American Apparel" or the "Company") (NYSE Amex: APP) during the period between December 20, 2006 and August 17, 2010, inclusive (the "Class Period").

No class has yet been certified in the above action. Members of the Class will be represented by the lead plaintiff and counsel chosen by the lead plaintiff. If you wish to choose counsel to represent you and the Class, you must apply to be appointed lead plaintiff no later than October 25, 2010 and be selected by the Court. The lead plaintiff will direct the litigation and participate in important decisions including whether to accept a settlement and how much of a settlement to accept for the Class in the action. The lead plaintiff will be selected from among applicants claiming the largest loss from investment in the Company during the Class Period. You are not required to have sold your shares to seek damages or to serve as a Lead Plaintiff. You may contact Brower Piven (through hoffman@browerpiven.com or 410/415-6616) to answer any questions you may have in that regard. 

The complaint charges American Apparel and certain of its officers and directors with violations of the Securities Exchange Act of 1934. American Apparel, Inc. engages in the design, manufacture, and retail of fashion apparel for women, men, children, and pets. It primarily offers T-shirts, denim, sweaters, and jackets.

The Complaint alleges that during the Class Period, defendants made false and misleading statements about American Apparel's hiring practices and the effect of such hiring practices on the Company's financial performance. Specifically, defendants falsely stated that they made "diligent efforts" to comply with employment and labor regulations, and failed to disclose, and made false statements to shareholders regarding, the effect of the Company's illegal hiring practices on its operating costs and margins. Beginning in July 2009, after the Company revealed that it was being investigated by U.S. Immigration and Customs Enforcement regarding its compliance with U.S. immigration law, the true financial condition of the Company began to be revealed. However, defendants assured investors that such investigation would not have a material effect on American Apparel.

On August 17, 2010, the Company issued a press release announcing that the Company expected to report a loss of $5 million to $7 million in the second quarter of 2010 on net sales of $132 million to $143 million. According to the press release, a significant factor in such losses was "lower labor efficiency at the Company's production facilities in the second quarter of 2010 compared to the prior year period. The lower labor efficiency was primarily a result of the hiring of over 1,600 net new manufacturing workers during the second quarter of 2010." By August 18, 2010, as this news was digested by the market, American Apparel's stock price had declined rapidly, from a close of $1.39 per share on August 16, 2010, to a close of just $0.81 per share on August 18, 2010 -- a decline of over 41%.

If you have suffered a net loss for all transactions in American Apparel, Inc. common stock during the Class Period, you may obtain additional information about this lawsuit and your ability to become a lead plaintiff by contacting Brower Piven at www.browerpiven.com, by email at hoffman@browerpiven.com, by calling 410/415-6616, or at Brower Piven, A Professional Corporation, 1925 Old Valley Road, Stevenson, Maryland 21153. Attorneys at Brower Piven have combined experience litigating securities and class action cases of over 50 years. If you choose to retain counsel, you may retain Brower Piven without financial obligation or cost to you, or you may retain other counsel of your choice. You need take no action at this time to be a member of the class.

Contact Information

  • CONTACT:
    Charles J. Piven
    Brower Piven, A Professional Corporation
    Stevenson, Maryland
    410/415-6616
    Email Contact