NEW YORK, Sept. 19, 2005 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action suit on behalf of all purchasers of the common stock of DHB Industries, Inc. ("DHB" or the "Company") (AMEX:DHB) acquiring the stock between April 29, 2004 and August 29, 2005, both dates inclusive (the "Class Period").
The action, entitled, Cohutt v. DHB Industries, Inc., et al., Case No. (not yet assigned), is pending in the United States District Court for the Eastern District of New York, and names as defendants, the Company, its Chairman and Chief Executive Officer, David H. Brooks, its Chief Financial Officer, Principal Accounting Officer, Treasurer and Secretary, Dawn Marie Schlegel, its Chief Operating Officer, Sandra Hatfield, and the following directors: Cary Lawrence Chasin, Jerome Krantz, Barry Berkman is and has been a director of the Company since February 2003. Defendant Berkman and Gary Nadelman. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood Web site at: www.whesq.com.
The Complaint charges defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. More specifically, the complaint alleges that, during the Class Period, defendants' positive representations regarding DHB's fast-growing business, disseminated in press releases and SEC filings, were materially false and misleading because they failed to disclose that a material portion of the Company's bulletproof vests contained a material amount of Zylon fibers whose effectiveness at stopping bullets degraded over time. By the beginning of the Class Period, defendants knew, or recklessly disregarded, that vests containing Zylon could potentially fail to stop bullets because of fiber degradation, and that serious concerns about their use in body armor was growing in the law enforcement community. Defendant, however, failed to warn investors of the palpable and substantial risk that its Zylon products posed to the Company's business.
While the price of the Company's securities was artificially inflated, and before its collapse, DHB insiders, including defendants Brooks, Schlegel and Hatfield, sold a total of 11,288,789 million shares of DHB common stock, reaping gross proceeds of over $220 million. Of that amount, defendant Brooks sold over 10.4 million shares for proceeds exceeding $204 million. The average price at which insiders sold their DHB stock was $19.51.
On August 30, 2005, before the open of ordinary trading, DHB issued a press release announcing that it stopped using Zylon in its body armor after the National Institute of Justice revoked its certification of Zylon-containing body armor. In addition, the Company announced that it would replace all Zylon vests in the field. This replacement program would result in an estimated $60 million charge in the third quarter of 2005. On this news, the price of DHB common stock fell by 23 percent in one day, from $6.66 per share on August 29, 2005 to $5.10 per share on August 30, 2005, on unusually heavy trading volume. DHB's tock price continued to decline, falling to $4.58 by the close of August 31, 2005. The insiders who sold their shares during the Class Period, at the average price of $19.51 per share, avoided tremendous losses.
If you are a member of the class described above, you may, not later than November 8, 2005, move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood Web site (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact Wechsler Harwood LLP.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.