Shares of Children's Place (NASDAQ: PLCE) were up more than 5% on Friday after the children's clothier and Disney Store owner announced that it was putting itself up for sale. The shares closed at $23.92, well off the 52-week high of $71.81. The company has been mired in scandal and recently CEO Ezra Dabah recently resigned after an investigation found that he had failed to comply with company rules regarding insider trading and reporting. Dabah remains on the board and own 18% of the company.

Here's where it gets interesting. According to The Wall Street Journal, "Mr. Dabah has told acquaintances that he wants to start his own private-equity firm and may be interested in buying Children's Place and the Disney Store chain it operates. Mr. Dabah had been CEO of Children's Place since 1991."

Children's Place hasn't filed a 10-Q in more than a year, has several shareholder class-action lawsuits pending against it, and its auditor, Deloitte & Touche, reported that it would not stand for re-election because it can't rely on information provided by Mr. Dabah and the company.

In other words, a big part of the blame for the company's troubles -- and resulting stock price -- could probably be placed on the shoulders of Mr. Dabah. With the stock so far off its highs, he may stand to benefit from his poor management if he ends up acquiring all or part of the company.

Children's Place (PLCE) explores sale originally appeared on BloggingStocks on Sun, 14 Oct 2007 12:10:00 EST. Please see our terms for use of feeds.

This spring, the SEC will be holding a round-table discussion on shareholder litigation. Observers have been arguing for years that shareholder litigation is a burden to corporate America, putting our financial markets at a competitive disadvantage.

A few weeks ago, I wrote about the class-action lawsuits being filed against Heelys Inc. (NASDAQ: HLYS):

I could swear securities lawyers have invented a sophisticated computer program capable of seeking out public companies to target with class-action lawsuits. A company reports a bad quarter, the stock tanks, and then for the next few weeks, press releases seem to come out daily announcing a class-action lawsuit "commenced ... on behalf of purchasers of ... stock issued pursuant or traceable to the false and misleading Registration Statement filed with the Securities and Exchange Commission in connection with the Company's ... initial public stock offering.

While I certainly support the right of shareholders to collect damages in instances of real fraud, it seems that every time a stock price drops, multiple firms file lawsuits. These suits divert management's attention from the business and burn up resources on legal fees. All of this would be fine, except that these suits very rarely go anywhere. And even when they do, shareholders rarely collect anything.

I'm not sure what the solution to this situation is, or even if there is one, but it's an important issue for the SEC to be looking at.

SEC mulls shareholder lawsuits originally appeared on BloggingStocks on Sun, 23 Sep 2007 17:10:00 EST. Please see our terms for use of feeds.

I could swear securities lawyers have invented a sophisticated computer program capable of seeking out public companies to target with class-action lawsuits. A company reports a bad quarter, the stock tanks, and then for the next few weeks, press releases seem to come out daily announcing a class-action lawsuit "commenced ... on behalf of purchasers of ... stock issued pursuant or traceable to the false and misleading Registration Statement filed with the Securities and Exchange Commission in connection with the Company's ... initial public stock offering."

The press release will then mention some important dates and vague accusations of securities fraud.

Heelys Inc. (NASDAQ: HLYS) the maker of the annoying skate shoes that so many young kids are wearing is the latest target of these lawsuits. Take a look:

• Brower Piven announces...
• Lerach Coughlin announces...
• Schatz Nobel Izard announces...
• Howard G. Smith announces... This prestigious firm even gives you an e-mail address if you have any questions: howardsmithlaw@hotmail.com (emphasis added).

These firms put out the press releases in an effort to find plaintiffs, and then hope to get the cases to discovery so they can fish for signs of wrongdoing.

Continue reading Lawyers line up to sue Heelys (HLYS)

Lawyers line up to sue Heelys (HLYS) originally appeared on BloggingStocks on Sun, 02 Sep 2007 15:40:00 EST. Please see our terms for use of feeds.