SEATTLE, July 31, 2004 (PRIMEZONE) -- Keller Rohrback L.L.P. (www.erisafraud.com) today announced that it has commenced an investigation against Krispy Kreme Doughnuts, Inc. ("Krispy Kreme" or the "Company") (NYSE:KKD) for violations of the Employee Retirement Income Security Act of 1974 ("ERISA"). The investigation focuses on investments in Company stock by the Krispy Kreme Doughnut Corp. Retirement Savings Plan and the Krispy Kreme Profit Sharing Stock Ownership Plan (the "Plans") between August 21, 2003 and the present (the "Class Period").
Keller Rohrback's investigation focuses on concerns that Krispy Kreme and other fiduciaries for the Plans may have breached their ERISA-mandated fiduciary duties of loyalty and prudence by (1) failing to prudently and loyally manage the Plans' assets by imprudently investing a significant amount of the Plans' assets in Krispy Kreme stock; (2) failing to monitor and provide fiduciary appointees with information that the appointing fiduciaries knew or should have known that the monitored fiduciaries must have in order to prudently manage the Plans' assets; (3) failing to provide complete and accurate information to participants and beneficiaries; and (4) breaching their duty to avoid conflicts of interest.
Specifically, Keller Rohrback is investigating allegations that, during the Class Period, Krispy Kreme stock was an imprudent retirement investment because (1) Krispy Kreme repeatedly reported strong operational growth and substantial increases in revenues, income and earnings per share and represented that the Company would continue to grow when in reality Krispy Kreme had been suffering from increasingly poor sales performance; (2) Krispy Kreme adopted a business model and strategy for increasing sales that was predicated on the perpetual addition of new stores and the hyping of the Company's entry into new markets, which resulted in unsustainable surges in sales that fell off once the hype ceased and the novelty of the new store wore off; and (3) Krispy Kreme's wholesale business was saturating the market with Krispy Kreme products which decreased the Company's overall profit margin; and (5) the price of Krispy Kreme's common stock was therefore artificially inflated during the Class Period.
Yesterday, the Company announced that it was also under investigation by the Securities and Exchange Commission. The inquiry generally concerns the Company's franchise reacquisitions and the Company's previously announced reduction in earnings guidance. Today the stock closed at $15.74 per share. At the start of the class period, August 21, 2003, the stock traded as high as $47.50 per share.
If you are a member of one of the Plans and purchased or held Krispy Kreme stock through the Plan, you may contact paralegal Jennifer Tuato'o, or any member of our team (Elizabeth Leland, Derek Loeser, or Lynn Sarko) toll free at 800/776-6044, or via e-mail at investor@kellerrohrback.com.
Keller Rohrback is one of America's leading law firms handling ERISA retirement plan litigation. Our attorneys helped pioneer this field in the Lucent and IKON ERISA breach of fiduciary duty cases--the first large-scale ERISA 401(k) cases filed. Keller Rohrback serves as lead and co-lead counsel in numerous ERISA breach of fiduciary duty cases, including the Enron and WorldCom, Inc. ERISA litigations and was most recently appointed lead counsel in The Goodyear Tire & Rubber Company ERISA Litigation. Keller Rohrback has successfully provided class action representation for over a decade. Its trial lawyers have obtained judgments and settlements on behalf of clients in excess of seven billion dollars.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca