In re Signet Jewelers Limited Securities Litigation

Court: United States District Court for the Southern District of New York
Case Number: 1:16-cv-06728 (JMF)
Judge: Hon. Jesse M. Furman
Case Contacts: John Rizio-Hamilton, Michael Mathai, Brenna Nelinson

This action asserts claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against defendants seeking to recover for their fraudulent course of conduct that artificially inflated the price of Signet Jewelers Limited (“Signet” or the “Company”) common stock from August 29, 2013 through February 27, 2017 (the “Class Period”). 

Signet is the world’s largest retailer of diamond jewelry.  It operates thousands of jewelry stores in North America and the United Kingdom under well-known trademarks including “Kay,” “Jared,” “Zales,” “J.B. Robinson,” and “Peoples.”  The action alleges that, throughout the Class Period, Signet and its senior officers made a series of materially misleading statements and omissions about (i) the strength of its in-house customer financing credit portfolio, (ii) the legal and reputational risks it faced from a class action lawsuit alleging, among other things, gender discrimination against female employees by Signet management; and (iii) the reputational risks it faced from allegations that Signet employees engaged in a systematic practice of “gem-swapping,” or replacing gems in customers’ jewelry with inferior-quality stones when that jewelry was brought in for repair and/or cleaning.

Specifically, throughout the Class Period, Signet falsely touted the Company’s financial strength by repeatedly representing that its credit portfolio was a key strategic advantage for the Company, that was performing “strongly.” However, after years of maintaining these assurances, Signet suddenly revealed in mid-2016 that it had begun a strategic review of its credit portfolio, and worse, had solicited offers to sell the entire credit book.  As a result of these unexpected disclosures, the price of the Company’s stock plummeted, causing substantial investor losses.

Separately, Signet has been defendant in a class action arbitration, pending since 2008, alleging gender discrimination.  Signet never fully disclosed the extent of its misconduct, but always downplayed it as implicating only allegations of gender discrimination levied concerning store-level employment practices.  In truth, Signet was rife with systemic sexual harassment that pervaded the Company at all levels, and which was condoned and exemplified by the behavior of its former CEO, who personally participated in harassing and discriminatory activities.  When documents making these facts clear were released in February 2017 and reported on by the Washington Post, Signet’s stock plummeted, causing additional losses.

Finally, Signet also failed to disclose fraudulent activity at its retail locations that was likely to destroy its brand reputation.  Specifically, Signet failed to disclose that on multiple occasions during the Class Period, when customers left their diamond jewelry at a Kay store to be cleaned or repaired, the authentic diamonds in the jewelry were replaced with less expensive stones.  In May 2016, after a news article reported on customers’ experiences with gem-swapping at Signet stores, Signet’s stock price fell over 10%.

On July 27, 2017, the Hon. Jesse M. Furman of the Southern District of New York appointed Public Employees Retirement System of Mississippi as Lead Plaintiff, and BLB&G as Lead Counsel. The Third Amended Complaint is due to be filed on or before September 29, 2017.

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