The proposed settlement, if finally approved, would be among the top 75 securities class action settlements of all time, out of thousands of settlements nationwide, according to the lead plaintiff.
In an unopposed motion, a preliminary settlement was submitted by the court-appointed lead plaintiff and class representative, the Public Employees’ Retirement System of Mississippi, on behalf of the class, resolving a pending consolidated securities class action in the court. A New York federal judge had earlier certified the class of investors who claimed that the defendant Signet Jewelers Ltd. had artificially inflated its stock price by making materially misleading statements and omissions about its culture of sexual harassment and the strength of its in-house customer financing credit portfolio (In re Signet Jewelers Limited Securities Litigation, March 26, 2020).
Securities fraud and sexual harassment claims.Investors in Signet Jewelers Ltd. brought an action claiming violations of Exchange Act Sections 10(b) and 20(a) for fraudulent conduct that artificially inflated the price of Signet common stock from August 29, 2013, through March 13, 2018 (the “class period”). The complaint alleged misstatements made regarding wholly-owned subsidiary Sterling Jewelers, Inc.’s in-house credit operations.
Despite disclosures to the contrary, the complaint alleged that Signet’s underwriting policies were reckless and, unknown to investors, 45 percent of its portfolio, or approximately $800 million, was subprime. The company made a series of corrective disclosures, eventually disclosing the subprime loans and selling them at a substantial discount. This resulted in substantial investor losses, according to the plaintiffs.
In addition, in action unrelated to the alleged portfolio losses, female Sterling employees filed a putative class action in the court claiming thatcompany employees were subjected to gender discrimination through improper promotion and compensation practices in violation of the Equal Pay Act. The gravamen of this suit was that the company culture was “rife with sexual misconduct.” When allegations of this misconduct became public, Signet’s stock fell again.
A class was certified despite the defendants’ claim that the dual nature of the case—securities fraud and sexual harassment—precluded this.
Resolution reached.The lead plaintiff reached a proposed settlement with the defendants that will resolve all claims in the action in exchange for a cash payment of $240 million for the benefit of the class. The lead plaintiff sought the court’s preliminary approval of the settlement under Rule 23(e)(1) so that notice of the settlement could be disseminated to the class and a hearing for final approval of the settlement (the “Settlement Fairness Hearing”) can be scheduled.
The plaintiff also submitted a proposed Order Preliminarily Approving Settlement and Authorizing Dissemination of the Notice of Settlement.
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