Court dismisses securities class action lawsuit against Blyth

A federal court recently dismissed a securities class action lawsuit against a marketing company after the firm filed a motion to expunge the matter.

The U.S. District Court for the District of Connecticut allowed for the class action claim against Blyth, Inc., to be dismissed. Shareholders initially urged a law firm to file the litigation in November 2012. This included all investors who acquired stock in the company during the class period between March and November 2012. The dismissal was announced on March 31, 2014, but can still be appealed in the future.

Blyth typically works with customers in a direct manner, selling multiple home products such as candles and health products.

Initial lawsuit filed in late-2012
Law firm Rigrodsky and Long, P.A. announced back in 2012 that it filed a lawsuit on behalf of investors of Blyth stock. The class period spanned March 14, 2012 to Nov. 6, 2012, and the complaint had multiple securities laws violations allegations against Blyth leaders. These surrounded the Securities Exchange Act of 1934.

The issues laid out in the lawsuit included the company not informing its shareholders that it was unable to complete the initial public offering for one of its subsidiaries, named ViSalus, Inc. Without this information, the company's stock began trading at higher prices.

Blyth's performance guidance continued to increase through its various fiscal reports, and business leaders noted that ViSalus' growth was the main reason. Eventually, on Aug. 16, 2012, the company explained that it would be selling approximately $175 million of ViSalus stock in the IPO. While it would continue holding onto 50 percent of ViSalus stock, it would not be purchasing any remaining shares of the subsidiary that it had not yet acquired.

Despite these intentions, the IPO was canceled on Sept. 26, 2012, due to business leaders explaining that the market conditions were not right for the sales growth it hoped for, as the first half of the year showed a net sales growth of more than 450 percent, something that was not sustainable for the latter part of the year. The stock eventually lost investors approximately $0.12 per share. Blyth updated its earnings guidance for the year in November 2012, which ended up having the stock level fall nearly 8 percent, to $17.54 per share on Nov. 7, 2012.