City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust v. FIGS, Inc.

Court: United States District Court for the Central District of California
Case Number: 22-cv-8912
Class Period: 05/27/2021 - 05/12/2022
Case Leaders: Hannah Ross, Avi Josefson, Scott R. Foglietta, Jonathan D. Uslaner

On December 8, 2022, Bernstein Litowitz Berger & Grossmann LLP (“BLB&G”) filed a class action lawsuit for violations of the federal securities laws in the U.S. District Court for the Central District of California against FIGS, Inc. (“FIGS” or the “Company”), certain of the Company’s senior executives, members of the Company’s Board of Directors, a controlling shareholder of the Company, and the underwriters of FIGS’ initial public offering (“IPO”) conducted on or around May 27, 2021, and FIGS’ secondary public offerings (“SPO”) conducted on or around September 16, 2021 (collectively, “Defendants”). The complaint expands the claims that were asserted in a previously filed related securities class action pending against FIGS captioned Ryan v. FIGS, Inc., No. 2:22-cv-7939 (C.D. Cal.) and is brought on behalf of all persons or entities that purchased or otherwise acquired FIGS Class A common stock: (i) between May 27, 2021, and May 12, 2022, inclusive (the “Class Period”); and/or (ii) pursuant and/or traceable to the IPO and/or SPO.

BLB&G filed this action on behalf of its client, City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust, and the case is captioned City of Hallandale Beach Police Officers’ and Firefighters’ Personnel Retirement Trust v. FIGS, Inc., No. 22-cv-8912 (C.D. Cal.). The complaint is based on an extensive investigation and a careful evaluation of the merits of this case. To view the complaint, see the Case Documents section of this page.

FIGS’ Alleged Fraud

Headquartered in Santa Monica, California, FIGS is a direct-to-consumer apparel brand that designs and sells scrubs and other healthcare-related apparel through the Company’s digital platform. In May 2021, FIGS conducted an IPO, through which Company raised more than $95 million and FIGS’ majority owner, Tulco, LLC (“Tulco”), reaped proceeds of approximately $450 million. Then, in September 2021, FIGS conducted an SPO, through which FIGS’ co-founders and co-CEO’s Heather Hasson and Trina Spear sold over $156 million worth of their personally held FIGS shares, and Tulco sold FIGS shares worth more than $256 million.

The complaint alleges that, in the offering materials issued in connection with the IPO and SPO, and throughout the Class Period, FIGS made numerous false and misleading statements to investors concerning the Company’s use of proprietary client data to drive internal product design and inventory decisions. For example, the offering materials for both the IPO and SPO falsely touted that the Company’s Direct-to-Consumer strategy provides “valuable real-time customer data” that “leads to operational efficiencies throughout our supply chain, inventory management and new product development.” As a result of Defendants’ misrepresentations and omissions, FIGS common stock traded at artificially inflated prices during the Class Period.

The truth began to emerge on December 10, 2021, when FIGS’ CFO suddenly announced his departure less than one year after assuming the role. On this news, FIGS stock declined by $6.57 per share, or over 13%. Then, on May 12, 2022, FIGS announced disappointing financial results for its first quarter of 2022 and slashed its full year outlook for expected sales, gross margin, and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), blaming supply chain disruptions for a lack of inventory, which caused sales constraints. As a result of these disclosures, FIGS stock declined by $3.21 per share, or 13%.

The filing of this action does not alter the previously established deadline to seek appointment as Lead Plaintiff. Pursuant to the November 1, 2022 notice published in connection with the Ryan action, under the Private Securities Litigation Reform Act of 1995, investors that purchased or otherwise acquired FIGS Class A common stock: (i) between May 27, 2021, and May 12, 2022, inclusive (the “Class Period”); and/or (ii) pursuant and/or traceable to the IPO and/or SPO may, no later than January 3, 2023, seek to be appointed as Lead Plaintiff for the Class. Any member of the proposed Class may seek to serve as Lead Plaintiff through counsel of their choice or may choose to do nothing and remain a member of the proposed Class.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Scott R. Foglietta of BLB&G at 212-554-1903, or via e-mail at scott.foglietta@blbglaw.com.