New York Attorney General Eliot L. Spitzer is investigating allegations that men's retailer Jos. A. Bank Clothiers Inc. practiced false advertising and deceptive sales tactics in its New York stores, a person familiar with the matter said yesterday.
Spitzer's office has received a complaint alleging a number of problems, including that the Hampstead, Md., company inaccurately claimed, in sales promotions, that some merchandise had originally sold for higher prices, the person familiar with the inquiry said.
The source said that Spitzer's office is examining whether this is true. If it finds problems, it may investigate whether this was done to lure customers to the store.
Spitzer's office has subpoenaed documents detailing Jos. A. Bank's advertising and in-store promotions at its 12 stores in New York, the retailer disclosed in a regulatory filing Wednesday.
Robert N. Wildrick, Jos. A. Bank's chief executive, said he does not know the specific target of the inquiry but vowed to ensure the company is in "full compliance" with the law.
"When we know if there is a mistake we made or if we are doing something incorrect, we will straighten it out," he said in an interview.
Spitzer's office subpoenaed the documents in late April. Wildrick said Jos. A. Bank executives have turned over the requested materials and are waiting for a response.
Brad Maione, a spokesman for Spitzer's office, declined to comment on the investigation.
A company has broad discretion in determining if it must disclose that it has received a subpoena, legal experts said yesterday. In general, a company must disclose an investigation that would influence an investor's decision to buy or sell its stock.
John Coffee, a professor at Columbia University's law school, said disclosures are often triggered at "the point when a company learns it is the target of a specific inquiry, not merely the subject of a general industry-wide request for information."
Spitzer's office has earned a reputation as an aggressive watchdog on Wall Street, and legal experts said his stature may have influenced Jos. A. Bank's decision to make the subpoena public. The attorney general's office has launched several recent inquiries into alleged deceptive sales practices by retailers, including auto dealers and furniture sellers.
"Any investigation by the attorney general's office in New York in the current environment is seen as material," said Jacob S. Frenkel, a former Securities and Exchange Commission lawyer.
In its filing, Jos. A. Bank said it did not know whether it was party to any legal proceedings or if the subpoena would have any adverse affect on its finances. The company's stock tumbled 8 percent yesterday, to close at $30.86.
Jos. A. Bank operates 222 stores in the United States. In 2003, it had sales of $299.7 million and earnings of $16.6 million. The company is in the middle of an aggressive expansion. It opened 50 stores in 2003 and plans at least 55 more in 2004, according to the retailer's annual report.