An investor has filed a lawsuit against Barnes & Noble Inc., accusing the book retailer of shoddy financial reporting that resulted in a recently disclosed
David Shaev, a New York attorney and Barnes & Noble shareholder, named several of the company's executives as defendants in the lawsuit, filed Tuesday in state Supreme Court in New York County.
The lawsuit is the latest dose of discouraging news for the retailer.
In July, the company disclosed that many of its prior financial statements contained errors. Its chief executive, William Lynch, resigned.
Earlier this month, the company said the SEC is investigating the mistakes in its past financial statements. Barnes & Noble Chairman Leonard Riggio disclosed that he had sold 2 million shares of the company's stock at a loss of about $40 million.
"The restatement and the accounting allegations under investigation by the SEC are only two symptoms of a pervasive deficiency of internal controls at Barnes & Noble impacting many areas of the company's operation and reporting," Shaev said in the lawsuit.
"Barnes & Noble has operated with deficient and inadequate financial reporting and inventory management systems since at least 2001. These systems do not adhere to industry-wide best practices and company internal audits have repeatedly shown them to be unreliable and subject to manipulation."
The company's stock has dived about 70% since 2006 as it struggles to deal with consumers' move to e-books, a market dominated by online retailer Amazon.com.
Barnes & Noble shares were down 30 cents, or 2%, to $13.79 in Wednesday morning trading on Wall Street.