Fidel v. Farley

Plaintiffs-appellants, a class consisting of investors who purchased Fruit of the Loom stock between September 29, 1998, and November 4, 1999 ("Class Period"), filed suit against defendants William Farley, Fruit of the Looms Chairman, Chief Executive Officer, and Chief Operating Officer; G. William Newton, Fruit of the Looms Senior Vice President of Finance and Chief Financial Officer; and defendant-appellee Ernst & Young, Fruit of the Looms auditor, under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5. The plaintiffs alleged in their original complaint that Farley and Newton had knowingly or recklessly misrepresented Fruit of the Looms condition during the Class Period in a successful effort to artificially inflate the price of the companys stock. They also alleged that Ernst & Young participated in the fraud by knowingly or recklessly issuing an unqualified audit opinion approving Fruit of the Looms 1998 financial statements and by consenting to that audit opinions inclusion in investor solicitation materials for a $250 million securities offering.