Just last August, Fortune magazine named Italian cheese maker Suprema Specialties one of its 100 fastest growing companies, and in October Forbes named it one of the country's 200 Best Small Companies.
Now investors are questioning those claims.
On Feb. 19, a class-action lawsuit was filed on behalf of investors who purchased Suprema stock between Aug. 8 and Dec. 21, 2001. A Connecticut-based law firm, Scott & Scott, LLC, filed the suit in U.S. District Court for the District of New Jersey.
According to a report on Just-Food.com, the suit charges Paterson, N.J.-based Suprema, its CEO and president Mark Cocchiola, and CFO Steven Venechanos with misrepresenting the company to the market and the Securities and Exchange Commission. The result, the suit alleges, was an artificial inflation of the price of Suprema stock.
On Nov. 8 last year, Cocchiola, Venechanos, the company and others sold 4,050,000 shares at $12.75 per share, for a total of $51.6 million. During that same month, the company reported a 60 increase in first-quarter income to $143 million. (For the prior fiscal year, the company reported $420 million in sales.)
On Dec. 21, the 17-year-old company announced it Venechanos resigned from his position as Suprema's CFO and that it is conducting an internal investigation into its previously filed financial statements. Trading of the stock on the NASDAQ halted the same day.
On Jan. 9 Suprema made Thomas Reed interim CFO, and two weeks later announced that it has retained Deloitte & Touche, LLP, to handle the company's internal investigation of its financial statements and records.
One month later, U.S. government officials executed a search warrant and removed a variety of financial and manufacturing records from Suprema's headquarters.
On Feb. 20, Suprema Specialties (CHEZ: NASDAQ) traded at $13 per share.