<p align= justify >According to a press release dated August 27, 2007, the scheme alleged in the Complaint filed centers on false statements regarding the Company’s business beginning May 3, 2007 that allowed the Company’s Chief Executive Officer to sell more than 68,000 shares on June 8, 2007, at prices above $41 per share, for proceeds of over $2.8 million and more than 82,000 shares on June 11, 2007 at prices of $41 or higher, for proceeds of over $3.3 million.</p> <p align= justify >The Complaint alleges that in May 2007 the Company announced positive earnings guidance for the second quarter 2007 of $0.13 to $0.16 per share which the Company deemed conservative, and earnings for fiscal 2007 of $2.15 to $2.25. The Company also announced a resumption of the Company’s share repurchase program up to $150 million over a two-year period beginning May 29, 2007. The market reacted favorably to this share repurchase plan and other positive statements by rising 2.9%.</p>
<p align= justify >The Complaint further alleges that even though the Company’s CEO knew that consumer demand had fallen materially, that rents and marketing costs were ballooning, and that schools had pushed the beginning of the school year later into the summer, he knowingly or recklessly ignored these factors, and: (a) stated that his “conservative” outlook for the second quarter was for earnings of 13 to 16 cents per share: and (b) further caused the price of Tween Brands stock to be inflated by issuing a press release announcing a $150 million stock buy-back. Even though the Company’s CEO knew these statements were materially false and misleading, he sold his shares, and failed to update or correct his misleading pronouncements at any time during the second quarter.</p>
<p align= justify >None of the adverse facts were disclosed until August 22, 2007, when the Company revealed that the Company’s financial performance during the second quarter had been weak, plagued by a decline in retail traffic, lower store transactions and other factors which appear to have been apparent during the quarter. The Company announced that quarterly earnings would be only $0.07 per share. The Company was also forced to revise downward its prior guidance for fiscal 2007. On this wholly unexpected news the price of Tween Brands stock dropped $11.00 from $38.59 to $27.59.</p>