Robbins Arroyo LLP: DS Healthcare Group, Inc. (DSKX) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against DS Healthcare Group, Inc. (NASDAQCM: DSKX or “DS”) in the U.S. District Court for the Southern District of Florida. The plaintiff brings the complaint on behalf of all purchasers of DS securities between May 15, 2014 and April 3, 2016, for alleged violations of the Securities Exchange Act of 1934 by DS’s officers and directors. DS, doing business as DS Laboratories, discovers and develops drug therapies for specialty pharmaceuticals, and commercializes personal care products for its consumer brands in North America and internationally.
DS Healthcare Accused of Engaging in Illegal Kickback Scheme
According to the complaint, throughout 2014 and 2015, DS submitted multiple filings with the U.S. Securities and Exchange Commission (“SEC”) and issued several press releases discussing the company’s positive financial condition. The company represented that it was optimistic that it would continue to be profitable and drive shareholder value while continuously operating at the top of its industry. However, the complaint alleges that these statements were misleading because DS officials failed to disclose that there was a kickback scheme involving fraudulent sales and channel stuffing, a business practice in which a company inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling. The complaint further alleges that the unaudited condensed consolidated financial statements for the two fiscal quarters ended June 30, 2015 and September 30, 2015 improperly recognized revenues and contained certain equity transactions that were not in accordance with the U.S. Generally Accepted Accounting Principles and were not properly disclosed.
On March 23, 2016, DS filed a Form 8-K with the SEC disclosing errors in its unaudited condensed consolidated financial statements for the two fiscal quarters ended June 30, 2015 and September 30, 2015, and stating that these financial statements should no longer be relied upon. DS also disclosed that its Board of Directors terminated Daniel Khesin as President for cause and removed him as its Chairman of the Board for cause because they believed he violated his fiduciary duty to the company and its subsidiaries and may have violated federal law. Then, on April 3, 2016, DS disclosed that Khesin engaged in inappropriate conduct, additional violations of the federal securities laws, and intimidation and defamation against Board members, management, and outside professionals. On this news, DS stock fell $0.18 per share, or over 21%, to close at $0.67 per share before NASDAQ halted trading on April 4, 2016. On April 5, 2016, DS filed a verified emergency motion for temporary restraining order and preliminary injunction to protect the company from Khesin’s alleged continued unlawful misconduct.
DS Healthcare Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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