Class Action Suit Spoils K-Tel's Christmas

Computergram International, Dec 24, 1998

K-Tel International Inc is now the subject of a class action suit. The complaint was brought in the US District Court in Minnesota on behalf of everyone who bought stock in the company between November 3 and November 19, 1998. Law firm Beatie and Osborn LLP says that during this period, K-Tel and certain of its officers violated federal securities laws.

The complaint alleges that the defendants publicized partnerships with Playboy Online and with Microsoft, while knowing all along that the company did not meet the minimum tangible net asset requirement for listing on Nasdaq. On November 17, K-Tel finally admitted that Nasdaq had threatened to de-list it (CI No 3,541). The company's share price promptly dropped more than 30%. People who bought K-Tel securities during the class period have until January 18 to join the action as a lead plaintiff. K-Tel executives hope to meet with Nasdaq early in the year to sort out the company's irregularities (CI No 3,561). All things considered, no happy holidays for them.