MURRAY, FRANK & SAILER LLP ANNOUNCES THE FILING OF A SHAREHOLDER CLASS ACTION AGAINST INFOSONICS CORPORATION - IFO
New York, NY July 11, 2006- Murray, Frank & Sailer LLP has filed a class action lawsuit in the United States District Court for the Southern District of California on behalf of all who purchased shares of InfoSonics Corporation (NYSE: IFO) ("InfoSonics" or the "Company") between May 8, 2006 and June 9, 2006, inclusive (the "Class Period").
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The complaint charges InfoSonics and certain of its officers and directors with violations of the Securities Exchange Act of 1934. InfoSonics is a distributor of wireless handsets and accessories in the United States and Latin America.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and financial results. As a result of defendants' false statements, InfoSonics' stock traded at artificially inflated prices during the Class period, reaching a high of $33.53 per share on June 2, 2006.
On June 12, 2006, before the market opened, the Company announced that it had filed an amended 10-Q for the quarter ended March 31, 2006 to include a restatement of certain non-cash items in the financial statements for that period. The non-cash adjustment was the result of warrants issued in conjunction with the Company's financing completed in January 2006. The warrants were originally classified as a derivative liability for the period of January 30, 2006 through the end of the first quarter, March 31, 2006. However, upon further investigation, the Company determined the warrants should have been reclassified as equity at February 17, 2006, the date upon which the SEC declared effective the Company's registration statement on Form S-3 registering the shares underlying the warrants. On this news, InfoSonics' stock collapsed to as low as $16.83 per share before closing at $17.38 per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company lacked requisite internal controls, and, as a result, the Company's projections and reported results issued during the Class Period were based upon defective assumptions and/or manipulated facts; and (b) the Company's financial statements were materially misstated for the first quarter due to the improper classification of warrants as liabilities instead of as equity.
Murray, Frank & Sailer LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
If you purchased or otherwise acquired InfoSonics stock between May 8, 2006 and June 9, 2006 and sustained damages, you may, no later than August 14, 2006, move the Court to serve as lead plaintiff. Shareholders outside the United States may also join the action, regardless of which exchange was used to purchase the securities. You can join this class action as lead plaintiff online at http://www.murrayfrank.com/CM/NewCases/NewCases.asp. If you would like to discuss this action, this announcement, or your rights and interests, please contact plaintiff’s counsel Bradley P. Dyer of Murray, Frank & Sailer LLP.
Murray, Frank & Sailer LLP
Bradley P. Dyer
Fax: (212) 682-1892
Email: [email protected]