Investors sue Daktronics of Brookings
SIOUX FALLS, S.D. (AP) - Some investors claim Daktronics of Brookings issued false and misleading statements and violated federal securities laws.
Two lawsuits - both seeking class-action status - have been filed in Sioux Falls federal court against Daktronics, which makes electronic display billboards and scoreboards.
Two top officials are accused of spreading misleading statements and-or concealing negative financial information.
Daktronics' treasurer and chief financial officer, William Retterath, says he doesn't think any rules were violated and that the company and its officers will "vigorously" defend themselves.
Also named as a defendant is James Morgan, Daktronics president and chief executive officer.
"A well-known fact of the matter is the economy has softened and affected many industries, including Daktronics," said Roberto Lange, a lawyer representing the company. "This strikes me as opportunistic plaintiffs' lawyers in a down market."
Other attorneys either could not be reached or declined to comment.
One of the lawsuits, filed by William Chambers, claims actions by Retterath and Morgan deceived investors regarding Daktronics' business and the value of its stock and enabled company insiders to sell 83,800 shares of their personally held Daktronics stock for gross proceeds in excess of $2.9 million.
The lawsuit claims statements that Morgan made during a conference call on second quarter 2007 results, including projections that net sales could reach $450 million for the fiscal year, caused Daktronics stocks to increase about $7 to $33.60 per share. But the court filing says Morgan failed to mention softness in the digital billboards and sports markets, several large orders being delayed, and the company's difficulty controlling its expenses.
A lawsuit filed by stockholder Robert Maggs repeated many of the allegations.
"When defendants' prior misrepresentations and fraudulent conduct were disclosed and became apparent to the market, the price of Daktronics common stock fell precipitously as the prior artificial inflation came out," the Chambers lawsuit said, adding that the revision caused Daktronics' stock price to fall more than 40 percent from its one-time high of $39.46 per share.
Daktronics stock closed down Tuesday almost 6 percent at $6.56 per share.
Information from: Argus Leader, http://www.argusleader.com