lululemon athletica (LULU) Securities Fraud Class Action Lawsuit
lululemon athletica (LULU) securities fraud class action summary
In two trading days in June, lululemon shareholders lost almost $2.6 billion in market value. A securities fraud class action lawsuit alleges that this loss in part is due to senior executives misrepresenting to shareholders the true business outlook for the company which in turn caused the LULU stock to trade at artificially high levels. Perhaps most concerning, former CEO Wilson sold 2 million shares during the class period at near highs, making $162 million from the sale.
Allegations contained in LULU securities fraud class action lawsuit
The LULU lawsuit alleges the following misrepresentations:
- Senior executives knew that the quality defects in the Luon yoga pants, which were shipped on March 1, 2013 in a fabric that was very thin, overly translucent and essentially rendered the pant see-through, resulted in part from Lululemon’s efforts to cut costs in order to raise profit margins to the detriment of product quality and brand reputation;
- Lululemon was being forced to sell its yoga pants at a discounted price during the Class Period to obtain sales and protect market share; and
- Luluemon board of directors were in serious discussions concerning replacing CEO Day.
LULU shareholders lose $2.6 billion in two trading days.
In June 10, 2013 LULU stock traded at $82.28. Two days later, the stock closed at 64.30, resulting in $2.6 billion in shareholder market value evaporating in two days.
lululemon athletica (LULU) securities fraud investigation
This investigation focuses on the underlying facts relating to the allegations set forth above. Did lululemon properly disclose to investors the true state of its business operations during the class period or did senior executives knowingly overstate those prospects? A fair question given that the former CEO sold alomst 2 million shares of LULU stock during the class period. Complete the web form on this page if you are a LULU shareholder and would like to learn more about our investigation.
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