Lerach Coughlin Stoia Geller Rudman & Robbins LLP (“Lerach Coughlin”) today announced that a class action has been commenced in the United States District Court for the District of New Mexico on behalf of purchasers of Mannatech, Inc. (“Mannatech”) (NASDAQ:MTEX) common stock during the period between August 10, 2004 and May 9, 2005 (the “Class Period”).
The complaint charges Mannatech and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Mannatech develops nutritional supplements, topical products, and weight-management products.
The complaint alleges that during the Class Period, defendants caused Mannatech’s shares to trade at artificially inflated levels by issuing a series of materially false and misleading statements regarding the Company’s business and prospects and by concealing improprieties by sale associates, allowed and encouraged by the Company. This caused the Company’s stock to trade as high as $26.04 per share during the Class Period. Defendants took advantage of this inflation, selling or otherwise disposing of 178,100 shares of their Mannatech stock then valued at more than $3.7 million.
On May 9, 2005, Barron’s published a story on Mannatech detailing CEO Caster’s history and questioning the Company’s sales associates’ methods and their “seemingly irrepressible inclination . . . to make extraordinary therapeutic claims for the supplements,” which had “irked some foreign regulators.” The story also discussed a civil suit filed in Los Angeles County against Mannatech for “‘negligent misrepresentation’” and “‘conspiracy to commit fraud’” stemming from alleged misconduct by its sales associates. On this news, Mannatech’s stock fell to as low as $11.64 per share on May 10, 2005 before closing at $12.15 per share on volume of 2.2 million shares.
According to the complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was at least tacitly encouraging associates to make misleading claims about the Company’s products; (b) contrary to defendants’ claims of fiscal 2005 growth and profitability, the Company would experience much worse results once its misleading practices were disclosed; (c) the Company lacked the controls to prevent false statements by associates; and (d) as a result of above, the Company’s earnings were based on misleading claims about the efficacy of its products.
Plaintiff seeks to recover damages on behalf of all purchasers of Mannatech common stock during the Class Period (the “Class”). The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Lerach Coughlin, a 150-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. Lerach Coughlin lawyers have been responsible for more than $20 billion in aggregate recoveries. The Lerach Coughlin Web site (http://www.lerachlaw.com) has more information about the firm.