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 (CM)|
|Judge:||Hon. Colleen McMahon|
|Class Period:||08/29/2013 - 03/13/2018|
|Case Contacts:||John Rizio-Hamilton, Rebecca E. Boon, Michael Mathai, Brenna Nelinson, Matthew Traylor|
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 March 13, 2018 (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, and (ii) a culture of severe sexual harassment at the Company.
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 very “conservatively managed,” including with “stringent” underwriting practice. 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. In May 2017, Signet revealed, for the first time, that 45% of portfolio consisted of subprime loans. In March 2018, the Company announced that it had reached an agreement to sell the subprime loans at a substantial discount to the value at which the Company had carried it on its books, resulting in a loss of $165 million to $170 million. 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, and always downplayed its alleged misconduct as involving only allegations of gender discrimination 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.
On July 27, 2017, the Public Employees Retirement System of Mississippi was appointed Lead Plaintiff in the securities action against Signet and its senior officers, and BLB&G was appointed Lead Counsel. Lead Plaintiff filed the Fifth Amended Complaint on March 22, 2018. On March 30, 2018, Defendants moved to dismiss the Fifth Amended Complaint; briefing on Defendants motion was completed on April 13, 2018, and on November 26, 2018, the Court denied Defendants’ motion to dismiss.
On March 15, 2019, Lead Plaintiff filed its motion for class certification. On July 10, 2019, the Court granted Lead Plaintiff’s motion for class certification, and certified a class of investors in Signet stock between August 29, 2013 and May 25, 2017.
On July 24, 2019, Defendants filed a petition for appeal to the Second Circuit pursuant to Federal Rule of Civil Procedure 23(f) based on the Court’s class certification decision. Lead Plaintiff opposed that petition on August 5, 2019. The Second Circuit granted Defendants’ petition on November 19, 2019.
On March 16, 2020, Lead Plaintiffs and Defendants entered into the Stipulation and Agreement of Settlement setting forth the terms and condition of the proposed settlement of this action for $240 million in cash (the “Settlement”). On March 26, 2020, Lead Plaintiff filed its motion for preliminary approval of the Settlement with the Court.
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