Mannatech Shares Down On Class-Action Suit

AP reported in Business Week Online today -

AUG. 31 2:50 P.M. ET Shares of network-marketing company Mannatech Inc. tumbled Wednesday after the company was hit with a class-action lawsuit by Lerach Coughlin Stoia Geller Rudman & Robbins LLP, one of the nation’s most high-profile and controversial law firms which has won billions of dollars representing investors.

Mannatech shares plunged $2.33, or 16 percent, to $12.26 in afternoon trading on Nasdaq, putting it among Nasdaq’s top price losers. The company’s shares are off 53 percent from their 52-week high of $26.10, set back in March, and are hovering 8 percent above a low of $11.48.

Shares of the Coppell, Texas-based company have largely treaded water since suffering a big blow in May, when an article in Barron’s raised questions about the effectiveness of Mannatech’s dietary supplements.

Mannatech develops and sells nutritional supplements and weight-management products through a network of independent salespeople. The suit filed by Lerach Coughlin claims Mannatech helped inflate the price of its stock by issuing false and misleading statements about its business. A spokesperson for Mannatech couldn’t immediately be reached for comment.

One of the suit’s lead attorneys is controversial litigator William Lerach, who is also representing Enron Corp. investors and has so far won more than $7 billion from Enron bankers including J.P. Morgan Chase and Citibank. Federal prosecutors are reportedly scrutinizing Lerach’s former role as a senior partner at the nation’s largest class-action law firm, Milberg Weiss, in an inquiry focused on whether the firm illegally paid plaintiffs whose names repeatedly appeared on securities class-action suits brought by the firm, the Wall Street Journal reported earlier this month.