NEW YORK, Oct. 12, 2012 (GLOBE NEWSWIRE) -- Shareholders of Zagg Incorporated ("Zagg" or the "Company") (Nasdaq:ZAGG) are reminded of the securities class action against Zagg and certain of its officers. The class action (2:12-cv-00852), filed in United States District Court, District of Utah, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Zagg securities between February 28, 2012 and August 17, 2012, both dates inclusive (the "Class Period"). This class action seeks to recover damages caused by defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-9 promulgated thereunder.
If you are a shareholder who purchased Zagg securities during the Class Period, you have until November 5, 2012 to ask the Court to appoint you as Lead Plaintiff for the Class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
Zagg designs, manufactures and distributes branded protective coverings, audio accessories and power solutions for consumer electronic and hand-held devices.
The Complaint alleges that throughout the Class Period, Zagg made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, the Company made false and/or misleading statements and/or failed to disclose that: (i) Robert G. Pedersen ("Pedersen"), the Company's founder and Chief Executive Officer ("CEO") had placed more than 50% of his Zagg ownership as collateral on margin, jeopardizing his future with the Company; (ii) as a result of Pedersen's reckless actions, the Company began a secret succession plan to replace him; and (iii) as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.
Unbeknownst to the Company's shareholders, a "margin call situation" involving Pedersen began in December 2011, whereby Pedersen borrowed substantial amounts of monies using his Zagg shares as collateral. Although Pedersen ultimately resigned his post as the Company's CEO due to the "margin call situation," investors were not informed that Pedersen had pledged Company stock until after his resignation over eight months later.
On December 21, 2011, Pedersen sold nearly $2.6 million worth of Zagg stock. However, at the time, shareholders were only informed that Pedersen sold the stock to "meet an immediate financial obligation." In truth, the December 21, 2011 stock sale was made to meet a margin call. Moreover, further undisclosed to investors, Pedersen had more than a million additional shares posted as collateral, which were subject to margin calls. Realizing that Pedersen had recklessly put his position as CEO at risk at the expense of investors, the Company also at this time began a succession plan to remove Pedersen as CEO, and to appoint Randall Hales ("Hales") as his successor. This succession plan was also purposefully hid from investors.
Moreover, on April 27, 2012, the Company filed a definitive proxy statement on a Schedule 14A (the "Proxy"). The Proxy contained the unanimous recommendation of the Company board of directors (the "Board") that Zagg shareholders vote in favor of, inter alia, the reelection of all five of the Company directors, including Pedersen. However, despite the Board's knowledge of Pedersen's stock pledges, the Board authorized the filing of the Proxy without including any reference to Pedersen's use of Company stock as collateral. The omission of this information rendered the Proxy materially false and misleading.
On August 17, 2012, the Company disclosed that Pedersen had "stepped down as CEO and Chairman" effective immediately. It was later disclosed that Pedersen had resigned after selling 515,000 shares of Zagg common stock on August 14, 2012, at prices ranging between $8.10 and $8.43, to meet margin calls.
In a conference call held on August 28, 2012, the Company revealed that Pedersen had sold an additional 1.2 million shares of Zagg stock to meet margin requirements. The Company also stated that Hales had been hired as President and CEO in December 2011, due to the "margin call situation," and that Hales had been responsible for "much of the day to day responsibilities" of the Company prior to Pedersen's resignation.
Immediately following the Company's August 17, 2012 announcement, Zagg stock declined $1.12 per share or over 13%, to close at $7.30 per share on August 20, 2012.
The Pomerantz Firm, with offices in New York, Chicago and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 75 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of defrauded investors. See www.pomerantzlaw.com.