(Updates with lawsuit excerpts in fourth paragraph.)
July 29 (Bloomberg) -- Princeton Review Inc., the test- preparation provider, was sued for securities fraud by a Michigan county pension fund that claimed the company misled investors about its condition.
Princeton Review issued “false and misleading statements” about the business related to the company’s April 2010 secondary stock offering and financial results, Washtenaw County Employees Retirement System said today in a filing Boston federal court. The pension is seeking class-action, or group, status for its suit.
The company sold 16.1 million shares at $3 each in April 2010, raising $48.3 million. In March, after reporting a $50.4 million loss from continuing operations for 2010, the stock fell 37.8 percent to 51 cents a share and then 23.5 percent the next day, according to the complaint.
“Contrary to the company’s public statements, the company was not executing well on its turnaround plan,” according to the suit.
Also named as defendants are the former chief executive officer, Michael Perik, who resigned in March, and the former finance chief, Stephen Richards, who left the company in June 2010. Roth Capital Partners LLC, the underwriter for the secondary offering, is also a defendant.
Chris Kasper, the current finance chief, didn’t immediately return calls seeking comment on the lawsuit. He is also named as a defendant in the suit.
Princeton Review, based in Framingham, Massachusetts, fell 3.9 cents, or 14 percent, to 23 cents at 4:30 p.m. New York time in Nasdaq Stock Market trading. The shares have dropped 81 percent this year.
The case is Washtenaw County Employees Retirement System v. The Princeton Review Inc., 11-cv-11359, U.S. District Court, District of Massachusetts (Boston).
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