Beeba’s Creations Is Sued on Claims of Illegal Profits

A Beeba’s Creations Inc. shareholder has sued the company and five of its executives in Superior Court in San Diego, alleging that the executives profited illegally on stock transactions after the company issued “misleading positive public statements” that artificially inflated the price of Beeba’s stock.

Shareholder William Weinberger accused Beeba’s Chairman Luther A. Henderson, President Arjun Waney, Vice Presidents Eugene Price and Ervin Tullman and Secretary Linda Maskovich of selling a total of 521,900 shares from March through June, 1986, at prices up to $26 per share, “reaping large but wrongful profits for themselves.”

“Shortly thereafter, Beeba’s revealed the true adverse information about the company, causing the price of its stock to plummet to a low of $11 per share,” said the suit, filed on Weinberger’s behalf by attorneys William Lerach, Jan Adler and Joyce Fitzpatrick of San Diego.

The information alluded to was Beeba’s disclosures in mid-1986 that its earnings were being adversely impacted by excess inventory and late shipments of goods, two “material” facts that should have been disclosed earlier to shareholders, the suit said.

In a prepared statement, Beeba’s Creations said its board of directors believes that Weinberger’s claims are unfounded and that the company will “vigorously” contest the lawsuit. Beeba’s chief financial officer, Thomas P. Baumann, was unavailable for comment Tuesday afternoon.

Most of the executives’ stock sales, which generated gross proceeds of $9.7 million, were made in connection with Beeba’s secondary public stock offering in May, 1986.

The suit asks that the executives be made to “disgorge” the allegedly illegal profits and place them in trust “for the benefit of the company and its shareholders.” The suit also seeks “all costs and damages” and attorneys’ fees