New Class Action Lawsuit Accuses Hasbro Of Misleading Investors By Making “Materially False And Misleading Statements” About Inventory Buildup, Product Demand
In the latest PR nightmare for the Magic: The Gathering and Power Rangers IP owner, a new class action lawsuit has accused Hasbro of causing financial harm to its investors by knowingly and willingly misrepresenting both the amount of product they were unable to move and customer demand for it.
Filed with the Southern District Court of New York by the law firm Bernstein Litowitz Berger & Grossmann LLP on behalf of the West Palm Beach Firefighters’ Pension Fund, said suit claims that Hasbro violated the United States Exchange Act by continuing to present an apparent four-year buildup of inventory as being done in order to meet anticipated customer demand rather than admit that the stockpiling was a result of their inability to adequately move their various products.
“Defendants represented that the rising inventory levels reported in the Company’s periodic financial reports filed with the SEC during the Class Period reflected outstanding and anticipated demand, rather than excess supply that outpaced waning demand,” reads the lawsuit, as initially tracked down and shared by Polygon. “Defendants’ Class Period representations that Hasbro’s inventories were of high quality and at appropriate levels were false. In truth, Defendants knew that Hasbro had overpurchased inventory to an extent that significantly outpaced customer demand.”
To this end, the pension fund’s attorneys continued, Hasbro had “made materially false and misleading statements and omissions, and engaged in a scheme to deceive the market,” in doing so “artificially inflated the price of Hasbro common stock and operated as a fraud or deceit on [all investors who purchased stock during the period between February 7th, 2022 and October 25th, 2024].”
“Later, when the truth concealed by Defendants’ prior misrepresentations and omissions was disclosed to the market, including after the close of the market on January 26, 2023, and October 26, 2023, the price of Hasbro common stock fell precipitously, as the prior artificial inflation came out of the price over time,” they further argued. “As a result of their acquisition of Hasbro common stock during the Class Period—and Defendants’ material misstatements and omissions— Plaintiff and other member of the Class suffered economic loss, i.e., damages, under the federal securities laws.”
Notably, the lawsuit’s initial filing did not specifically name which product lines, such as Power Rangers, Star Wars, Magic: The Gathering, or otherwise, was the most abundant culprit behind Hasbro’s inventory buildup.
However, as any fan who has either walked into a card shop or Target toy aisle in recent months can attest, rather than only one such Hasbro franchise being to blame, said buildup likely included all of them, as their entire library of brands have recently fallen victim to drops in quality and, as a result, fan interest (Heck, without the extra money it makes from their Universes Beyond crossover sets, one wonders if Magic: The Gathering would still be in as somewhat-stable of a state as it is now).
As for relief, the lawsuit is seeking compensation in the form of “compensatory damages”, with interest, for the financial losses caused by Hasbro, the payment of all plaintiffs’ legal fees, and “other further relief as the Court may deem just and proper.”
In seeking said relief, the aforementioned law firm has requested that this case play out in “a trial by jury”. However, as of writing, a trial date has not been set.
Further, Hasbro has yet to offer any public comment on the lawsuit.
NEXT: Hasbro Reportedly “Never Wanted ‘Power Rangers’”, Brand’s Purchase “Done Without Consulting R&D”
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