Wagner v. Spectrum Brands Legacy, Inc. et al 1:19-cv-178 — On March 7, 2019, investors sued Spectrum Brands Legacy, Inc. (“Spectrum” or the “Company”) in United States District Court for the Western District of Wisconsin. The SPB class action alleges that plaintiffs acquired Spectrum stock at artificially inflated prices between June 4, 2016 and April 25, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the SPB Lawsuit, please contact us today!
Summary of the Allegations
Formerly known as Spectrum Brands Holdings, Inc., the Company (NYSE: SPB) is engaged in the creation, marketing and distribution of “branded consumer products.”
These goods range from consumer batteries to specialty pet supplies and personal care products. Some of Spectrum’s best-known brands include Rayovac, Kwikset, George Foreman, IAMS and Eukanuba.
Spectrum’s products are made available through retailers, wholesalers and associated outlets in North America, Europe, the Middle East, Africa, Latin America, and the Asia-Pacific regions.
Summary of Facts
Spectrum and two of its former officers (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding information about the Company’s business practices, operations and prospects during the Class Period.
Specifically, they are accused about omitting truthful information about operational issues at some of its facilities from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Spectrum stock to trade at artificially inflated prices during the time in question.
The truth came out in a press release issued by the Company on April 26, 2018. In it, Spectrum admitted that: “The challenges related to our two greenfield manufacturing and distribution projects were meaningfully greater than we expected.”
In particular, it stated: “As we brought our East Coast distribution center into our new Hardware & Home Improvement facility in Edgerton, Kansas at the end of February, we experienced facility-wide disruptions which hampered distribution capabilities materially in March. Our Global Auto Care facility in Dayton struggled at higher production levels in March, which led to significant inefficiencies and shipping challenges.”
That day, the Company also announced the resignation of its then-CEO and the appointment of his successor. In an ensuing conference call, the new CEO said the operational issues at the facilities couldn’t be fixed “overnight.”
A closer look…
As alleged in the March 7 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For example, in an announcement pertaining to the construction of a manufacturing and logistics facility in Dayton, Ohio, at the beginning of the Class Period, the Company stated in relevant part: “This new facility will improve our speed and efficiency while providing us room for further growth.”
Then, in another press release issued by the Company on January 26, 2017, Spectrum stated in pertinent part: “We are seeing the operating leverage benefits of our global infrastructure and shared services platform, as well as our continuous improvements of processes and strong cost reduction results in our plants and supply chains.”
Finally, in yet another press release issued by Spectrum on February 8, 2018, the Company stated in relevant part: “Our GAC U.S. footprint consolidation is now complete, which is important as we head into the peak spring and summer period. Also, our HHI distribution consolidation in Kansas is moving toward completion in February…”
Impact of the Alleged Fraud on Spectrum’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is May 6, 2019. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Spectrum common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.