San Diego, CA -- (SBWIRE) -- 02/20/2012 -- The Shareholders Foundation announces that a current long term investor in NYSE: CRI shares filed a lawsuit against certain directors at Carter's, Inc. over alleged breaches of fiduciary duties to Carter's in connection with its accounting for discounts offered to some wholesale customers.
Investors who purchased Carter's, Inc. (NYSE:CRI), including those who purchased CRI shares as early as 2005 or 2004 and currently hold those NYSE CRI shares, have certain options and should contact the Shareholders Foundation at mail(at)shareholdersfoundation.com or call +1(858) 779 - 1554.
Between 2004 and 2009 former Executive Vice President of Sales at children's clothing marketer Carter's Inc. allegedly manipulated the amount of discounts Carter's granted its largest wholesale customer in order to induce it to purchase greater quantities of Carter's products. He allegedly then concealed his actions by persuading the customer to defer subtracting the discounts from payments until later financial reporting periods.
According to the complaint the plaintiff alleges that certain directors caused Carter’s Inc to publicly issue false financial results by improperly reporting millions of dollars in margin support payment to major wholesale customers in incorrect periods and as a result the defendants caused Carter’s to improperly recognize revenue on millions of dollars of product sold via wholesale customers.
The plaintiff claims that the defendants artificially inflated Carter’s publicly reported revenues, net income and earnings per share and as a result, for 2007 and 2008, Carter’s Inc accounts receivable were materially overstated by 26% and 24%, respectively illustrating the extent to which defendants manipulated Cart’s financial results to paint a misleading positive financial picture to the market.
Indeed, Carter’s restated its historical financial statements for the fiscal years 2004-2008.
In late 2010 the U.S. Securities and Exchange Commission charged the former Executive Vice President of Sales of Carter's, Inc for allegedly engaging in financial fraud and insider trading.
The SEC alleged that his misconduct caused an understatement of Carter’s expenses and a material overstatement of its net income in several financial reporting periods. The SEC said the executive made more than $4.7 million between 2004 and 2009 from the exercises of options granted to him by Carter’s and sales of the resulting shares.
After discovering the former executive’s actions Carter’s conducted its own internal investigation.
In late 2011 the former vice president of sales at Carter's pleaded not guilty to 32 criminal charges related to a fraud he allegedly committed while working there. An attorney for the former Executive Vice President of Sales said in a statement that the executive "acted at all times at the direction, and with the knowledge, of Carter’s senior management."
Those who purchased Carter's, Inc. (NYSE:CRI), including those who purchased CRI shares as early as 2005 or 2004 and currently hold those NYSE CRI shares, have certain options and should contact the Shareholders Foundation.
Shareholders Foundation, Inc.
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