SureBeam faces action
irradiation provider SureBeam on behalf of purchasers who claim
that executive board members have been carrying out illegal stock
market trading.
A class action has been filed in the US courts against food irradiation provider SureBeam on behalf of purchasers who claim that executive board members have been carrying out illegal stock market trading.
Lawyers Berger & Montague, announced on 15 September that the class action had been commenced in the United States District Court for the Southern District of California in response to stock market deals carried out during the period between 16 March 2001 and 20 August 2003.
The complaint charges SureBeam, together with its officers and directors with violations of securities law. The complaint alleges that during the Class Period, defendants caused SureBeam's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. As a result of this inflation, SureBeam was able to complete an initial public offering of 6.7 million shares, raising net proceeds of $60 million (€53.2m) on March 16, 2001.
On 30 July 2003, the Company issued a press release entitled "SureBeam to Delay Earnings Announcement." The press release stated in part "SureBeam Corporation announced today that it is delaying the release of its second quarter earnings from its planned date of 31 July 2003. As previously reported by the company in its Current Report on Form 8-K/A filed on 11 June 2003, on 9 June 2003, Deloitte & Touche LLP was named as the Company's independent auditor for the year ending 31 December 2003, replacing KPMG LLP. The Company's management has not completed preparation of the financial statements for the second quarter and Deloitte & Touche has not yet completed its review of those statements."
Subsequent to this statement the company has again delayed the announcement of its earnings for the second quarter and has also dismissed its auditor, Deloitte & Touche, a move that has further delayed the release of the results.
Undoubtedly the action will come as a major blow to both SureBeam and the food irradiation industry as a whole. Although a growing industry in the US, it has been blighted by bad publicity from a number of advocacy and "green" groups, claiming that the technology has still not been scientifically proven.
In Europe, where the irradiation of foods is still largely outlawed, the proceedings will be watched from the sidelines with mounting curiosity.
