Controversial CEO out at American Apparel

Dov Charney, the controversial founder of American Apparel, has been fired "for cause" as CEO, the company said.

Charney was suspended as president and CEO of the hipster apparel chain in June for alleged misconduct and violations of company policy. The decision was made by the board’s “suitability committee,” which was formed to oversee an internal investigation in the wake of Charney's suspension.

“Based on this investigation, the special committee determined that it would not be appropriate for Mr. Charney to be reinstated as CEO or an officer or employee of the company,” the company said in a statement. "While under suspension as CEO, Mr. Charney had been serving as a consultant to the company. This relationship has now been terminated.”

The retailer selected Paula Schneider, a former Warnaco executive, to succeed Charney, effective Jan. 5. She worked for a number of retail and apparel companies, including Warnaco, Gores Group, BCBG Max Azria, and Laundry by Shelli Segal.

The interim chief executive, Scott Brubaker, will remain as a consultant to help with the transition.

Charney has been dogged by lawsuits and allegations of misconduct for years, mostly over his personal conduct with women and judgment.

It remains to be seen whether Schneider can put the struggling American Apparel back on track. The company reported a larger-than-expected loss of $19.2 million in the third quarter ended Sept. 30 amid falling sales here and abroad.

Some industry experts said the termination could set off a long legal battle with Charney, who has dedicated the better part of his career to building the company.