Friday, July 14, 2006

Parlux, Part Deux

According to a press release and an 8-K filed by the company this week, the offer to acquire all of the outstanding shares of common stock of Parlux Fragrances, Inc. (NASDAQ: PARL) by the company's CEO, Ilia Lekach, has been withdrawn.

This will likely largely moot the controversy raised in the class and derivative cases discussed in my prior post on Parlux here, so in all likelihood, we will never know if Parlux intended to raise a vigorous defense. I have posted about the vigorous defense phenomenon (and some interesting permutations) here, here, and here.

But our story doesn't end there. According to this post from the WSJ Law Blog:
Yesterday . . . the Miami Herald reported that six of the seven company directors, including the CEO and CFO, sold Parlux stock in big chunks back in February, when the stock was at or near its all-time high. Since then, the stock price has been cut in half
If the prior cases did not include allegations relating to this unusual trading foresight (and given the timing of the company's disclosure, they probably did not), it is likely that they will soon be amended. So as one controversy subsides without a vigorous defense, another rises in its place.

As an aside, Parlux has posted on their website the following policies:
  • Code of Business Conduct and Ethics (here);
  • Code of Ethics For Executive And Financial Officers (here)
  • Insider Information And Trading policy (here)
Copies of other pertinent corporate governance policy documents are also available here.

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