Class Action Suit Filed Against Radio Shack

Scott Smith

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Radio Shack shareholders filed a securities class action lawsuit because the company issued misleading statements that inflated stock prices. The lawsuit charges Radio Shack Company leaders with falsifying, manipulating and overstating financial results to conceal the true negative conditions of Radio Shack's business. The company stock prices rose from $20.00 per share before the start of the period in question to a high of $35.41 on February 19, 2004. As of March 16, 2007 Radio Shack's shares closed at $26.04.

The lawsuit claims Radio Shack executives implemented artificial inflation accounting principles and then sold more than 500,000 shares of their own stock at an average price of $31.00 per share for proceeds that netted the executives $17 million.

As expected, Radio Shack had no comment.