Law Offices of Howard G. Smith, Representing Investors of Koss Corporation, Announces Class Action Lawsuit

BENSALEM, Pa.--(BUSINESS WIRE)--

Law Offices of Howard G. Smith, representing investors of Koss Corporation (“Koss” or the “Company”) KOSS, has filed a class action lawsuit in United States District Court on behalf of a class (the “Class”) consisting of all persons or entities who purchased Koss securities between July 12, 2005 and December 21, 2009, inclusive (the “Class Period”). The class action lawsuit was filed in the United States District Court for the Eastern District of Wisconsin.

The Complaint charges Koss and certain of the Company’s current and former executive officers with violations of federal securities laws. Koss designs, manufactures and markets high-fidelity stereophones, computer headsets, speaker-phones, telecommunications headsets, active noise canceling stereophones, wireless stereophones and compact disc recordings of American Symphony Orchestras on the Koss Classics label. The Complaint alleges that throughout the Class Period defendants knew or recklessly disregarded and failed to disclose or indicate the following: (1) that certain Company employees had devised and carried out a scheme to defraud investors and divert Company funds potentially exceeding $31 million; (2) that the Company’s financial statements and corporate bank account balances had been manipulated to conceal the diversion of corporate funds; (3) that, as a result, the Company’s financial results were overstated during the Class Period; (4) that the Company’s financial results were not prepared in accordance with Generally Accepted Accounting Principles (“GAAP”); (5) that the Company lacked adequate internal and financial controls; and (6), as a result of the above, that the Company’s financial statements were materially false and misleading at all relevant times.

On December 21, 2009, Koss shocked investors when it announced that NASDAQ halted trading of Koss stock at the Company’s request after it discovered certain unauthorized transactions at the Company, and the Board of Directors had appointed a special committee of independent directors to lead an internal investigation to determine the effect of the transactions on Koss’s financial statements.

On December 24, 2009, the Company announced that its Principal Accounting Officer had been terminated and two members of its accounting staff who served under her had been placed on unpaid administrative leave. Koss subsequently announced that it had dismissed Grant Thornton LLP as its independent auditors, and its previously issued financial statements for the fiscal years ended June 30, 2005 through 2009 and the three months ended September 30, 2009, should no longer be relied upon due to the unauthorized financial transactions.

On January 11, 2009, when trading in Koss stock resumed, shares of the Company’s stock declined $1.32 per share, approximately 24%, to close on January 11, 2010, at $4.19 per share, on unusually heavy volume.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased Koss securities between July 12, 2005 and December 21, 2009, you have certain rights, and have until March 16, 2010, to move for lead plaintiff status. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215)638-4847, Toll-Free at (888)638-4847, by email to howardsmith@howardsmithlaw.com or visit our website at http://www.howardsmithlaw.com.