Coughlin Stoia Geller Rudman & Robbins LLP has announced that a class action has been commenced on behalf of an institutional investor in the United States District Court for the District of Connecticut on behalf of purchasers of Sturm, Ruger & Company, Inc. common stock between April 23, 2007 and October 29, 2007.
The complaint charges Sturm Ruger and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that, during the Class Period, defendants made positive statements about the companys revenues and earnings. As alleged in the complaint, these statements were materially false and misleading because defendants misrepresented and/or failed to disclose the following adverse facts, among others:
(i) that the reductions in inventory balances by Sturm Ruger in the first and second quarters of 2007 had reduced the companys parts and components inventories below efficient levels, preventing Sturm Rugers manufacturing units from meeting production and shipment schedules and resulting in the companys inability to sustain current or historical sales levels;
(ii) that Sturm Rugers “backlog” of unfilled purchase orders was materially inflated because of the companys inability to meet current production and shipping schedules due to inventory shortages;
(iii) that orders received from the companys independent distributors were artificially boosted by the companys mandated change to firm and noncancellable purchase order submissions and were not reflective of actual demand for the companys products;
(iv) that Sturm Rugers independent distributors were carrying large quantities of the Companys unsold products, increasing the risk that these distributors would reduce or curtail their future purchases; and (v) that based on the above, defendants had no reasonable basis for their positive statements and opinions concerning Sturm Rugers current financial performance and condition.
On October 24, 2007, the company announced that its firearm sales for the third quarter of 2007 fell 26%, resulting in a loss of 3 cents per share, and that sales had declined due to inventory issues at its distributors. Following this news, the price of Sturm Rugers common stock fell by $6.45 per share, closing at $10.65 per share a one-day decline of more than 37% on volume of 4.1 million shares.
The plaintiff seeks to recover damages on behalf of all purchasers of Sturm Rugers common stock during the Class Period. The plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.