American Apparel CEO puts big ugly foot in his mouth

Gary Sattler — Mon, 27 Jul 2009 15:30:00 EST

Filed under: Bad News, Management, Law, Employees

We might be tempted to think, in this day and age, that a move as stupid as this one could not happen in our enlightened business world. However, the CEO of American Apparel (AMEX: APP), seems to think otherwise.

According to a story provided by Gawker.com; "American Apparel's ... madman CEO, Dov Charney is demanding the firing of employees he deems unattractive and thus detrimental to the "AA aesthetic."

It doesn't take a rocket scientist to know that people (especially in America) are ultra sensitive to negative comments about appearance. It also does not take a great deal of intelligence to recognize that the firing of employees based on their looks is a stupidly discriminatory practice. So, being that this project is being undertaken at the sole direction of CEO Charney, one does not have to spend much time analyzing exactly who is the stupid one over there.

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American Apparel CEO puts big ugly foot in his mouth originally appeared on BloggingStocks on Mon, 27 Jul 2009 15:30:00 EST. Please see our terms for use of feeds.

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Former accountant sues American Apparel -- alleges manipulation

Zac Bissonnette — Wed, 12 Nov 2008 09:45:00 EST

Filed under: Scandals

There's plenty of scandal surrounding American Apparel (AMEX: APP) since it went public but, up until now, it's consisted almost exclusively of allegations of bizarre sexual conduct by the company's founder and CEO Dov Charney.

But a new lawsuit tosses the American Apparel quandary into a whole new category. Roberto Hernandez, a former accountant at the company, is suing (subscription required) for wrongful termination alleging that, in 2006, Charney "demanded that Mr. Hernandez pad the inventory" in attempt to make the company appear more attractive to investors. Hernandez says that he "refused to participate in any scheme to potentially defraud the investors" and was fired on November 9th of that year.

This is second time this month that American Apparel has come under fire over allegations that it sought to mislead investors. On November 4th, I wrote about a lawsuit accusing the company of asking an alleged victim of sexual to participate in an arbitration hearing with a predetermined outcome -- and then plotting to issue a press release declaring victory in the sham hearing.

Here's the question: With American Apparel's stock beaten down so badly in spite of incredibly impressive sales growth, does any of this really matter? Up until now, you might have been able to say that it doesn't. But many investors will want to steer clear of a company with a lawsuit accusing the company's CEO of directing an accountant to cook the books.

The shares fell yesterday after the company reported earnings that were down sharply because of stock-based compensation expenses.

UPDATE: This morning American Apparel released a statement in response to the lawsuit and media reports, calling it a "frivolous and baseless lawsuit recently filed by a disgruntled former employee." The company added that "It is unfortunate that the media continues to focus on sideshows and false allegations. It does a disservice to the 10,000 men and women who make American Apparel such an outstanding company; to our customers who love our products; and to our investors who appreciate our strong financial performance and our dedication to being a leading public company."

Former accountant sues American Apparel -- alleges manipulation originally appeared on BloggingStocks on Wed, 12 Nov 2008 09:45:00 EST. Please see our terms for use of feeds.

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