This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Charney Plans to Sue American Apparel Board

NEW YORK (The Deal) -- A source familiar with American Apparel (APP - Get Report) believes the hipster retailer's recent equity financing was part of a conspiracy to dilute founder and CEO Dov Charney's stake in his company and said the embattled executive plans to sue the company's board for its failure to disclose the fact that it was investigating him and planning to fire him.

The source asserted that the board committed fraud by failing to mention, either in proxy materials or other communications, that it was conducting a probe of the CEO and planning to oust him ahead of a late-March share offering and June 18 annual shareholder meeting.

"The board conspired to deceive shareholders," said the source, who asked to remain unnamed. "There should have been disclosure."

Los Angeles-based American Apparel is taking legal advice from attorneys at Jones Day and also announced today that it has retained advisers from investment bank Peter J. Solomon to ensure that it maintains "adequate access to capital in the future at a reasonable cost," according to a June 23 statement.

A Peter J. Solomon representative declined to comment. Jones Day didn't return calls. When reached by phone, Charney declined to comment.

In an email, American Apparel's new co-chairman, Allan Mayer, said, "We continue to believe we did the right thing, for the right reasons, in the right way, and are very confident we are on very str ong legal ground."

Mayer denied that the March equity raise was an intentional move to dilute Charney and make it easier to fire him.

Nor is American Apparel on the block. "We are certainly not looking to sell the company," Mayer wrote.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
APP $0.67 0.00%
ICON $32.03 0.00%
SQBG $13.99 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs