CHICAGO, May 14, 2003 (PRIMEZONE) -- The deadline for purchasers of AFC Enterprises, Inc. ("AFC" or the "Company") (Nasdaq:AFCEE) (formerly AFCE) publicly traded securities to move for lead plaintiff in a securities fraud class action brought against AFC, and certain of its officers and directors, is rapidly approaching. If you purchased AFC securities between March 2, 2001 and March 24, 2003, inclusive ("Class Period"), and you wish to be a lead plaintiff in the case, you must move to serve as lead plaintiff by filing a motion in the United States District Court for the Northern District of Georgia, Atlanta Division, by May 27, 2003.
If you wish to discuss your rights and interests, or if you have information relevant to the lawsuit, you may contact Carol V. Gilden or Michael E. Moskovitz at Much Shelist Freed Denenberg Ament & Rubenstein, P.C., by calling a toll-free number 1-800-470-6824, or by sending an e-mail to investorhelp@muchshelist.com. Your e-mail should refer to AFC.
The complaint that Much Shelist has filed alleges that AFC violated the federal securities laws by issuing a series of materially false and misleading statements to the market, which had the effect of artificially inflating the market price of AFC's securities. In addition to AFC, the complaint also names Frank J. Belatti, the Company's Chief Executive Officer, and Gerald J. Wilkins, its former Chief Financial Officer.
Specifically, the complaint alleges that the press releases and SEC filings the defendants issued during the Class Period were materially false and misleading because they failed to reveal that AFC inflated its operating results by improperly: (1) accounting for the sale of corporate-owned stores to franchisees; (2) accounting for the value of certain long-lived assets; (3) understating advertising costs; and (4) accounting for inventory at the Company's Seattle Coffee Company division. As a result of the Company's fraudulent accounting, AFC's financial statements published during the Class Period were materially false and misleading and not prepared in accordance with Generally Accepted Accounting Principles.
On March 24, 2003, after the market closed, AFC shocked the market by announcing that it would be restating its financial statements for fiscal year 2001 and the first three quarters of 2002. The Company also reported that it was examining whether or not its financial statements for fiscal year 2000 should be restated. On March 25, 2003, AFC stock plunged to as low as $11.30 per share, after closing at $17.10 per share the previous day.
In the aftermath of this disclosure, AFC has also announced that it will be restating its financials for all of 2000 and that it faces delisting by the NASDAQ stock market after failing to file its 2002 annual report on time. In addition, Gerald J. Wilkins, its CFO and a defendant named in the complaint, has resigned.
According to the complaint, AFC insiders privy to the Company's fraudulent accounting practices did not share investors' losses. In a December 2001 public offering, AFC insiders sold 7,000,000 shares of their holdings at $23 per share. Additionally, Wilkins, Belatti and other Company insiders sold shares at prices as high as $34 per share, reaping profits of over $30 million during the Class Period. If you purchased AFC securities during the Class Period and if you meet certain other legal requirements, you may file a motion in the court where the lawsuit has been filed to serve as a lead plaintiff. You must file your motion no later than May 27, 2003.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. Section 78u-4).
Much Shelist's history is one of experience, leadership and results. For more than 25 years, Much Shelist has represented plaintiffs in class action litigation in federal and state courts across the United States. The firm has successfully prosecuted cases involving securities fraud, antitrust violations, consumer fraud, unlawful business practices and insurance company fraud. Under Much Shelist's leadership, class members have obtained judgments and settlements in excess of $4 billion.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca