Former United States Securities and Exchange Commission attorney Willie Briscoe, founder of The Briscoe Law Firm, PLLC, and the securities litigation firm of Powers Taylor LLP announce that a federal class action lawsuit has been filed against Tile Shop Holdings, Inc. (“Tile Shop” or “Company”) (NasdaqGS: TTS). The firms are investigating additional legal claims against the officers and Board of Directors of Tile Shop during the period of August 22, 2012 and November 13, 2013 (the “Class Period”).
If you are an affected investor and you want to learn more about the lawsuit or join the action, contact Willie Briscoe at The Briscoe Law Firm, PLLC, (214) 239-4568, or via email at WBriscoe@TheBriscoeLawFirm.com, or Zachary Groover at Powers Taylor LLP, toll free (877) 728-9607, via e-mail at firstname.lastname@example.org. There is no cost or fee to you.
In a recently filed federal class action complaint, Tile Shop and certain of its officers and directors were charged with violating certain provisions of the Securities Exchange Act of 1934. Specifically, the complaint alleges that among other things, defendants misrepresented and/or failed to disclose that: (i) Tile Shop had been acquiring the vast majority of its product from China, paying below-market prices for product that contained dangerously high lead levels; (ii) due to the high lead levels in the products being acquired from China, Tile Shop was reporting unsustainably high profit margins and faced customer backlash and millions of dollars in potential legal liability; (iii) Tile Shop had obtained 8.3% of its product sold in fiscal 2011, 16.3% of its product sold in fiscal 2012, and 32.2% of its product sold in fiscal 2013 from a Chinese supplier called Beijing Pingxiu (“BP”) that was owned and operated by defendant Rucker’s brother-in-law, Fumitake Nishi, who was also himself an employee of Tile Shop, and as such, compliance with Item 404 of SEC Regulation S-K required that the purchases from BP be identified as related party transactions – but they were not; (iv) Tile Shop had been using BP and other captive, phantom suppliers to overstate inventories, understate cost of sales and overstate gross profits in its Class Period financial reports; and (v) as a result of the foregoing, defendants had overstated Tile Shop’s financial results throughout the Class Period. According to the complaint, when the truth was revealed to the public, Tile Shop’s stock dropped dramatically.