SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP announces that a class action lawsuit has been filed in the Central District of California on behalf of purchasers of Sequential Brands Group, Inc. (NASDAQ:SQBG) securities between November 3, 2016 and December 11, 2020, inclusive (the “Class Period”). The case is captioned D’Arcy v. Sequential Brands Group, Inc., No. 21-cv-02305, and charges Sequential Brands and certain of its executives with violations of the Securities Exchange Act of 1934.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Sequential Brands securities during the Class Period to seek appointment as lead plaintiff in the Sequential Brands class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Sequential Brands class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Sequential Brands class action lawsuit. An investor’s ability to share in any potential future recovery of the Sequential Brands class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the Sequential Brands class action lawsuit or have questions concerning your rights regarding the Sequential Brands class action lawsuit, please provide your information here or contact counsel, J.C. Sanchez of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the Sequential Brands class action lawsuit must be filed with the court no later than May 17, 2021.
Sequential Brands owns various consumer brands and licenses its brands for a range of product categories, including apparel, footwear, fashion accessories, and home goods. Sequential Brands promotes, markets, and licenses its brands through various distribution channels, including to retailers, wholesalers, and distributors.
The Sequential Brands class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) in late 2016, Sequential Brands knew or should have known that its goodwill was likely impaired; (ii) Sequential Brands avoided and delayed the material write down to goodwill in late 2016 through 2017; (iii) Sequential Brands understated its operating expenses and net loss and also materially overstated its income from operations, goodwill, and assets from late 2016 through 2017; (iv) Sequential Brands’ internal controls were deficient; (v) Sequential Brands failed to restate, correct, or disclose relevant improprieties, deceptive conduct, misstatements, omissions, and control violations; (vi) as a result of the foregoing, Sequential Brands was at greater risk of regulatory scrutiny and enforcement; and (vii) thus, defendants’ statements about its business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
On November 9, 2017, Sequential Brands issued a press release entitled “Sequential Brands Group Announces Third Quarter 2017 Financial Results,” disclosing that “[i]ncluded in the net loss for the third quarter 2017 were non-cash impairment charges of $36.5 million for indefinite-lived intangible assets related to the trademarks of five of the Company’s non-core brands,” marking the first time Sequential Brands noted its need for impairment charges related to intangibles and its assets generally. The press release also listed Sequential Brands’ goodwill at $304,123,000 and its total current assets at $1,381,329,000 for the period ended September 30, 2017. On this news, Sequential Brands’ stock price fell approximately 38%.
Then, on February 28, 2018, Sequential Brands announced a goodwill adjustment of more than $304 million. On this news, Sequential Brands’ stock price fell approximately 8%.
Finally, on December 11, 2020, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint against Sequential Brands alleging that Sequential Brands failed “to take into consideration clear, objective evidence of likely goodwill impairment, which avoided and delayed a material write down to goodwill in the fourth quarter of 2016 and the first three quarters of 2017.” According to the SEC, “[b]y avoiding an impairment to its goodwill in 2016, Sequential’s financial statements and SEC filings materially understated its operating expenses and net loss and materially overstated its income from operations, goodwill, and total assets. This created a false impression of its financial health and ability to execute on its business plan. Sequential carried forward its material errors, resulting in material misstatements and omissions in Sequential’s financial statements and SEC filings for the first three quarters of 2017. Sequential belatedly impaired all of its goodwill—$304.1 million—in the fourth quarter of 2017.” On this news, Sequential Brands’ stock price fell an additional 11%, further damaging investors.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations, and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
