SAN DIEGO & NEW YORK--(BUSINESS WIRE)--Shareholder rights law firm Robbins LLP announces that a purchaser of Sequential Brands Group, Inc. (NASDAQ: SQBG) filed a class action complaint against the Company and its officers and directors for alleged violations of the Securities Exchange Act of 1934 between November 3, 2016 and December 11, 2020. Sequential Brands owns various consumer brands, which it promotes and markets through various distribution channels, including retailers, wholesalers, and distributors.
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Sequential Brands Group, Inc. (SQBG) Misled Shareholders About Its Income From Goodwill, Operations, and Assets
According to the complaint, Sequential Brands knew as early as December 14, 2016, that it was "more likely than not" that its goodwill was impaired, but failed to record an impairment charge to its goodwill. In avoiding the write down of its goodwill in late 2016 and 2017, Sequential Brands materially understated its operating expenses and net losses and overstated its income from operations, goodwill, and total assets.
On February 28, 2018, Sequential Brands announced its fourth quarter and full year 2017 financial results, which belatedly announced the goodwill adjustment of a "non-cash charge of $304.1 million." On this news, Sequential Brands' stock price fell $6.08 per share to close at $76.00 per share on February 28, 2018.
Then, on December 11, 2020, the SEC filed a complaint against Sequential Brands alleging that the Company failed "to impair its goodwill as required by accounting principles and federal securities laws." The SEC complaint further alleges that "[i]f Sequential had reasonably conducted goodwill impairment testing in the fourth quarter of 2016, then the test would have shown that Sequential's goodwill was impaired by over $100 million, a material amount[,]" and that "Sequential had in its possession facts and information tending to show that its statement that goodwill was not impaired was materially false and misleading. Those facts were not known to investors or the independent auditor." On this news, the Company's stock fell $2.03 per share, or 11%, to close at $16.20 per share on December 11, 2020.
If you purchased shares of Sequential Brands Group, Inc. (SQBG) between November 3, 2016 and December 11, 2020, you have until May 17, 2021, to ask the court to appoint you lead plaintiff for the class.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
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