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Cohen, Milstein, Hausfeld Toll, P.L.L.C. Announces Supplemental Notice in In Re Cybershop.com Inc

Business Editors, Legal Writers

2000

Overview

(BUSINESS WIRE)--June 14, 2000-- WASHINGTON--(BUSINESS WIRE)--June 14, 2000-- The Action seeks damages for alleged violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule l0b-5 promulgated thereunder. The defendants are: CyberShop.com, Inc. (\"CyberShop\"); Jeffrey Tauber, Cybershop's President, Chief Executive Officer and Chairman of the Board; Jeffrey Liest, formerly CyberShop's Chief Operating Officer and Chief Financial Officer; and Linda Wiatrowski, formerly CyberShop's Vice President, General Merchandise Manager and an Executive Officer of the Company. Plaintiffs allege that, during the Class Period, CyberShop issued materially false and misleading statements concerning its business and financial results, and included these false and misleading statements in various press releases and filings with the Securities and Exchange Commission. Specifically, CyberShop publicly announced in a press release on October 26, 1999 that its net sales had increased 458% for the quarter ended September 30, 1999 compared to the same quarter of the prior year. In that press release, CyberShop's Chairman, Jeffrey Tauber, stated further the exceptional growth that CyberShop had experienced in 1999 and that the Company was gearing up for the holiday season. Plaintiffs allege that the defendants concealed from investors the material fact that sales of CyberShop.com, the Company's flagship operation, actually declined 28% from the same period a year earlier. Moreover, the tremendous 458% net sales increase reported in the press release allegedly came from an acquisition and from a joint venture that was facing substantial problems caused by a change of strategy by the venture partner, Tops Appliance City, which has since fled for bankruptcy protection. Plaintiffs further allege that these false statements; and others set forth below, caused the price of CyberShop common stock to be artificially inflated; trading as high as $14.25 per share during the Class Period. Plaintiffs further allege that, certain defendants, while in possession of this material adverse information, sold approximately $7.4 million worth of their CyberShop holdings and CyberShop sold $6 million worth of stock and warrants in a private placement. Plaintiffs allege that at the end of the Class Period, the Company disclosed that sales for its flagship operations were extremely poor and that the Company would have to close its two largest online stores and effectively exit the business and become an Internet incubator. Following these announcements, the price of CyberShop common stock closed at $3.9875 per share, reflecting a decline of more than 70% from its Class Period high of $14.25 per share.

• Publisher: Business Wire
• Subject: Business models / Chairman of the board / Chief executive officers / Cohen, Milstein / Electronics / Equity financing / Fair presentation / Financial performance / Investments / Investors / Joint ventures / King, Martin Luther Jr (1929-1968) / Liest, Jeffrey / Sales / Stock prices / Success / Tauber, Jeff