Medifast says class action lawsuit is dismissed
Medifast says judge dismisses 2011 class action lawsuit related to restatements, earnings
OWINGS MILLS, Md. (AP) -- Weight-loss company Medifast Inc. said Monday that a lawsuit over a 2010 restatement of its earnings has been dismissed.
Judge George L. Russell III of the U.S. District Court for the District of Maryland found Thursday that Medifast's accounting errors were the result of the company's rapid growth and its change to a new accounting firm. The lawsuit was initiated in March 2011. It said the company and several executives made false or misleading statements and didn't disclose significant facts about Medifast's business.
In September 2010, Medifast restated its results from 2006 through 2008 because it discovered problems with the way it accounted for deferred taxes. In the middle of March 2011, the company delayed the filing of its fiscal 2010 results by about two more weeks because it needed more time to review the way it accounted for certain expenses. The lawsuit was filed about a week later. Medifast reported its quarterly results on March 31, 2011.
In addition to Medifast, the lawsuit named former Chairman and CEO Bradley McDonald, who died in 2012, President and Chief Operating Officer Margaret MacDonald-Sheetz, and former Chief Financial Officer Brendan Connors.
Shares of Medifast slipped 3 percent to $22.23 on Monday and were unchanged in aftermarket trading.
