Coinstar (Nasdaq:CSTR) Has Two Class Action Lawsuits Filed Against It

After disappointing quarterly results, Coinstar (Nasdaq:CSTR) has had two class action lawsuits filed against them, both alleging the company failed to disclose its real performance during the class period, violating the Securities Exchange Act of 1934.

Ryan & Maniskas, LLP, one of those filing a class action, said this:

"The complaint alleges violations of the Securities Exchange Act of 1934 against Coinstar and certain of its officers and executives. During the Class Period, Coinstar failed to disclose that customers were buying fewer DVDs per purchase; poor inventory management and controls resulted in the Company removing material amounts of old inventory early in 4Q; lower sales of more expensive "Blue-ray" DVDs and poor title selection was resulting in lower overall sales; the 28-day delay movie studios imposed on Coinstar was adversely affecting sales; and competition from online video streaming providers such as Netflix was having a significant adverse impact on revenue."

The other class suit filed by Faruqi & Faruqi, LLP, said essentially the same thing. They noted that "...officers and directors are charged with issuing a series of materially false and misleading statements in violation of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder."

Shares of Coinstar have plunged after the release of their last quarterly results showing them underperforming by a surprisingly wide margin.