I.C. Isaacs settles shareholder suit

Sportswear company agrees to pay $625,000 after IPO complaint

November 22, 2001|By Meredith Cohn | Meredith Cohn,SUN STAFF

I.C. Isaacs & Co., a Baltimore and New York-based sportswear designer and marketer, said yesterday that it has settled a securities class action lawsuit alleging the company misrepresented itself to shareholders during its initial public offering in 1997.

Under the agreement, approved by the U.S. District Court in Maryland on Tuesday, shareholders who purchased stock during the IPO would be eligible to split $625,000.

The company sold 4.3 million shares, which works out to more than 14 cents a share before lawyers fees.

The plaintiffs' law firm, Milberg Weiss Bershad Hynes & Lerach, applied for a fee of $250,000 from the settlement.

The company - known for brands including Marithe & Francois Girbaud, Beverly Hills Polo Club and Urban Expedition - did not admit to wrongdoing in the settlement. It said in a statement that the settlement will be paid by its insurance carrier and will not affect the company's financial position.

No one at the company was available for comment, but Robert J. Arnot, I.C. Isaacs' chairman and chief executive, said in the statement, "We are pleased to have this situation behind us, as we can now focus all of our attention on the future of I.C. Isaacs."

The plaintiff's lead lawyer, Kirk E. Chapman, said the settlement would not cover what the lawsuit alleged shareholders lost. Shares were sold for $10 during the IPO - from Dec. 17, 1997, to Nov. 11, 1998 - and reached $11.375 during that period. But by the end of that time, shares were trading at $2.

The lawsuit said the company misrepresented the "appeal to consumers of the company's largest selling brands, the profitability of many of the company's lines of apparel and the company's ability to maintain those lines going forward and the company's cost to manufacture its products."

Chapman said, "It was hard-fought litigation, and we would have hoped for more. But this was in the best interests of the shareholders."

Securities litigation has been on the rise since the stock market tumble. And settlements are common in class action lawsuits, Chapman said, because of the time and expense of going through a trial. His New York-based firm focuses on the class action cases.

Shareholders of I.C. Isaacs have until Dec. 14 to apply for their portion of the settlement.

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