Financial Reporting

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SEC to check Zale's books

Law firm drafts class-action complaint

By Courtesy of IDEX Online staff reporter
November 02, 2009

Shares of jewelry retailer Zale Corp. plunged nearly 26 percent after the company revealed that the Securities and Exchange Commission (SEC) will investigate its accounting after Zale restated its 2008 and 2009 earnings.
 
Zale announced on Thursday its fourth-quarter and annual results after postponing the release twice. It reported the SEC investigation during a conference call on Friday.
 
The company said in the conference call that after conducting a review of advertising accounting, it found "certain advertising costs previously recorded as prepaid were expensed in periods subsequent to the period in which the advertisement actually ran," according to Reuters.
 
The bad news did not stop there. A Bensalem, Pa., law firm announced that it is "investigating potential claims against Zale Corporation, concerning possible securities violations in relation to public statements made by the Company between November 16, 2006 and October 29, 2009."
 
The investigation, according to the Saturday release by the law offices of Howard G. Smith, focuses on allegations that statements made by Zale during that period "were false and misleading."
 
The law firm asked Zale shareholders to contact them. The law firm's Web site invites the public to join a class action complaint against Zale.

--IDEX Online

Editor's note: In an update to this story on Nov. 3, the law firm of Kendall Law Group has announced a shareholder investigation of Zale Corp. for possible securities violations concerning admitted errors in its public statements affecting stock purchased between November 16, 2006 and October 29, 2009. In addition, the law firm of Finkelstein Thompson LLP is investigating potential claims on behalf of shareholders of Zale Corp. arising from the company's recent announcement of a Securities and Exchange Commission investigation into the company's expense accounting relating to recent restatements of 2008 and 2009 earnings. 

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