Wynnefield Capital, Inc. v. Tile Shop Holdings, Inc.

This is a developing situation. Tile Shop (TTS) was trading for around $3 until the company announced plans to de-register with the SEC, suspend its dividend, and cancel its share buybacks. The share price crashed by 2/3rds as a result.

They have been sued by a shareholder who claims that this was a deliberate scheme to take over the company at a fire sale price:
The board of directors of a Delaware corporation has a fundamental duty and obligation to “protect the corporation enterprise,” and to defend stockholders “from harm reasonably perceived, irrespective of its source.” This case involves a board that is purposely letting half of its members – including the known repeat fraudster who founded the company – buy a controlling stake in the company through open market purchases at depressed prices, without paying a fair price, much less a control premium. Instead of adopting a poison pill or taking other defensive measures to protect public stockholders in the face of a change of control transaction executed in the open market, this board helped turn a slowly developing creeping takeover into a modern street sweep.
The company is temporarily enjoined from deregistering, and some think that the stock is interesting at the current price. The complaint filed in Delaware court is posted below.

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