Lawsuits mounting up for Parlux

By Simon Pitman

- Last updated on GMT

Related tags Parlux Stock market U.s. securities and exchange commission Stock

Shareholders are demonstrating their dislike of the recent action
taken by Parlux Fragrance executive by filing a succession of
lawsuits claiming that company insiders had misled shareholders by
issuing misleading statements.

Lawsuits are currently being taken out by law companies Abraham Fruchter, Saxena White and Brower Biven as a demonstration of shareholders anger over the way they believe they have been misled by company executives in the course of the past few months.

Saxena White has set a deadline of October 16 for Parlux investors to be appointed ast plaintiff for its class action, which has been filed with the Southern District of Florida.

Its suit, much like the others, seeks damages for violations of federal securities laws on behalf of any investors who acquired Parlux shares from February 8, through to August 10.

The Saxena White lawsuite claims that Parlux CEO Ilia Lekach and CFO Frank Buttacavoli violated specific sectons of the Securities Exchange Act.

Likewise, the suit also states that the two executives gave highly positive statements with regards the company's financial prospects in an effort to create the impression that it was well positioned to continue the strong growth it achieved last year.

During the period in question, Parlux shares were trading as high as $37, but have since plummeted to $5.05 and are continuing to fall.

The loss in shareholder confidence came about as the company failed to file the results for its most recent financial quarter, citing administrative difficulties as the main reason for the delay.

Since then the company has said that sales for the period have dropped on the back of falling revenues at major retail outlets in the US, but has still not filed its quarterly results.

Evidently the company's administration team had not been able to keep up with rapid expansion over the course of the last year, when sales more than doubled from $47.44m in 2005, to reach $111.77m.

As a result Nasdaq has threatened Parlux with delisting from the New York Stock Exchange if Parlux does not comply and file its results with the US Securities and Exchange Commission within a reasonable period of time.

When the drama at Parlux first unfolded, industry analysts began to suggest that Parlux would be sold off brand-by-brand.

Indeed, last week Parlux indicated that it was in discussions to sell its Perry Ellis brand to New Jersey company Victory for an estimated $140m. The company said that this move would enable it to concentrate on its celebrity-branded perfumes.

Parlux, is the license holder to big fragrance names such as Perry Ellis XOXO, Ocean Pacific and tennis star Andy Roddick, and really hit the big-time by licensing deal to produce fragrances and asscessories using the name and image of media figure and heiress Paris Hilton.

Related topics Fragrance

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