After over a year of vigorous litigation, Labaton Sucharow, lead counsel and representing the class and lead plaintiff, Donald Tick, reached an agreement to settle In re PriceSmart, Inc. Securities Litigation, for $2.35 million in cash paid by the defendants. Final approval by the Court was granted on August 24, 2005. In re PriceSmart, Inc. Securities Litigation was a federal class action brought on behalf of all persons and entities who purchased or otherwise acquired the securities of PriceSmart between November 1, 2001 and December 16, 2003, inclusive.
PriceSmart owns and operates membership shopping warehouses through majority or wholly-owned ventures in Latin America, the Caribbean, and Asia. On November 10, 2003, PriceSmart issued a press release announcing that it would restate its financial statements for fiscal year 2002 and the first three quarters of fiscal year 2003. In its press release, PriceSmart admitted that it inflated its warehouse sales by more than $29 million by improperly recording certain transactions in its 2002 and 2003 financial results. As a result of an internal investigation conducted at the direction of its Audit Committee, the Company determined that certain transactions during the period from October 2001 through May 2003 did not satisfy revenue recognition criteria under Generally Accepted Accounting Principles ("GAAP") and Securities and Exchange Commission ("SEC") rules.
As a result of this settlement, class members will recover more than 31 percent of the damages.