SAN DIEGO & NEW YORK--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Iconix Brand Group, Inc. (NASDAQGS: ICON) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Iconix Brand Group, Inc. ("Iconix") securities between February 22, 2012 and November 5, 2015, for alleged violations of the Securities Exchange Act of 1934 by Iconix's officers and directors. Iconix, a brand management company, owns a portfolio of consumer brands across women's, men's, entertainment, and home industries in the United States and internationally.
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Iconix Accused of Engaging in Accounting Fraud
According to the complaint, Iconix used a business model that relied on regular acquisitions of new desirable brands to offset slowing revenue streams from older brands. However, as times and tastes changed, the popularity of Iconix's brands waned, causing royalty revenue and profit to decline. Iconix then began selling its brands to joint ventures to purportedly bring its brands to market and gain a global presence. However, the complaint alleges that Iconix officials were using accounting manipulations to prop up the company's financial metrics and mask its true financial condition. Specifically, in violation of Generally Accepted Accounting Principles ("GAAP"), Iconix officials improperly recognized revenue, inflated the company's cash flows, misclassified expenses, and failed to timely write down uncollectible accounts receivable, goodwill, and trademarks. Iconix officials concurrently deceived the market by highlighting the company's "record" revenues, strong cash flows, and business growth.
In November 2013, Iconix received a comment letter from the U.S. Securities and Exchange Commission raising concerns about the company's accounting for and disclosure of non-GAAP free cash flow. Just three months later, on March 18, 2014, the company's Chief Financial Officer resigned after serving in this position for nine years. In October 2014, the company's President and CEO, as well as its Executive Vice President, unloaded massive quantities of Iconix stock while it traded near its class period high for combined proceeds of over $40 million. Not long after Iconix issued its third quarter Form 10-Q on November 7, 2014, a third party analyst undertook a forensic accounting of the company's financials and revealed that it was engaged in questionable accounting that obscured its deteriorating financial health. On November 5, 2015, Iconix revealed that through the investigation of its Special Committee, it identified accounting errors that led it to restate over two years of financial statements and reduce its guidance. Then, on March 28, 2016, Iconix announced disappointing financial results for the fourth quarter and fiscal year 2015. On March 29, 2016, Iconix's stock traded at a mere $7.40 per share, an 83% decline from its class period high of $44.22 per share.
Iconix Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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