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SAN DIEGO -- Warehouse retailer PriceSmart, Inc. said Friday that a settlement has been reached in the consolidated securities suit In re PriceSmart, Inc. Securities Litigation, which is pending in the U.S. District Court for the Southern District of California.
The retailer, which operates shopping warehouse clubs in 12 countries, said it will pay $2.35 million to settle a lawsuit filed by shareholders linked to the restatement of financial results in late 2003. This was the final lawsuit stemming from the restatement -- which involved seven quarters from fiscal 2002 and 2003 after the company discovered it overstated sales by more than $29 million.
Under the settlement, which is subject to court approval, the $2.35 million will be paid to the plaintiffs in exchange for a release of claims and a dismissal of the complaint. PriceSmart's insurance carrier is expected to fund about 80 percent of the settlement payment.
The company said in a statement that "the settlement was entered into to avoid the expense and disruption of protracted litigation and does not constitute an admission of liability by the company or its former officers." When contacted by Progressive Grocer, interim c.e.o. Robert Price declined further comment.
Late last month, PriceSmart said it was thinking of going private, because of the heavy expense of complying with the reporting requirements of the Sarbanes-Oxley Act. Also last month, the retailer said it would close its three warehouses in Mexico, which faced stiff competition from Wal-Mart and Costco.