On March 15, 2011, Kid Brands issued a release announcing the termination of two high-level executives at its LaJobi subsidiary and admitting to a violation of United States Customs laws. The release further explained:
The Board’s investigation has found instances at LaJobi in which incorrect import duties were applied on certain wooden furniture imported from vendors in China, resulting in a violation of anti-dumping regulations. On the basis of the investigation, the Board concluded that there was misconduct involved on the part of certain LaJobi employees in connection with the incorrect payment of duties, including misidentifying the manufacturer and shipper of products. The ongoing investigation is also focusing on certain of LaJobi’s business and staffing practices in Asia ...
|The Company currently estimates that it will incur costs of approximately $7 million relating to customs duty owed and may be assessed a penalty of up to 1x customs duty by U.S. Customs as well as possibly being subject to assessment for additional duties on other items.|
As a result of the foregoing disclosure, Kid Brands’ stock plummeted from a closing price of $9.24 per share on March 14, 2011 to a close of $6.91 per share on March 15, 2011, a decline of over 25%, after experiencing an intra-day low of $6.57 per share, on heavy trading volume.
About Kahn Swick & Foti, LLC
KSF, whose partners include the Former Louisiana Attorney General Charles C. Foti, Jr., is a law firm focused on securities class action and shareholder derivative litigation with offices in New York and Louisiana. KSF's lawyers have significant experience litigating complex securities class actions nationwide on behalf of both institutional and individual shareholders. Recent cases include In re Virgin Mobile USA IPO Litigation, 2:07-cv-05619-SDW-MCA ( D. N.J.), Co-Lead Counsel, $19.5 Million Settlement ; In re BigBand Networks, Inc Securities Litigation , 3:07-CV-05101-SBA (C.D. Cal.), Co-Lead Counsel , $11 million settlement ; In re U.S. Auto Parts Networks, Inc. Securities Litigation , 2:07-cv-02030-GW-JC (C.D. Cal.), Lead Counsel, $10 million settlement. KSF is also federally court-appointed Co-Lead Counsel in THE shareholder derivative cases against BP and Bank of America (Merrill Lynch merger) emanating from their recent multi-billion dollar economic declines.To learn more about KSF, you may visit www.ksfcounsel.com.