The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Iconix Brand Group, Inc. (“Iconix,” or the “Company”), and certain of its senior executives. The Complaint alleges that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired Iconix common stock during the Class Period.
Iconix is a brand management company and owner of a diversified portfolio of global consumer brands across women’s, men’s, entertainment, and home industry segments. Iconix monetizes the brands it owns by licensing their intellectual property rights to retailers and wholesalers, who are responsible for manufacturing and distributing the brand products.
Specifically, the Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose to investors that: (1) the Company had underreported the cost basis of its brands; (2) that the Company engaged in irregular accounting practices related to the booking of its joint venture revenues and profits, free-cash flow, and organic growth; (3) that, as a result, the Company’s earnings and revenues were overstated; and (4) certain Defendants engaged in insider trading while the stock traded near its Class Period high. On December 14, 2014, a third party analyst, Off Wall Street Consulting Group, Inc. (“Off Wall Street”), who undertook a complex forensic accounting of the Company’s financials revealed that Iconix engaged in questionable accounting that obscured its deteriorating financial health. The price of Iconix stock declined by 8.7%, which would mark the beginning of the free fall of the Company’s stock price as the truth regarding its multi-year, multi-faceted fraud began to emerge through a series of events including suspicious resignations of top executives, news articles that continued to challenge the Company’s accounting practices, the SEC review of the Company’s accounting practices, and company disclosures regarding Iconix’s declining financial health. Then, on November 5, 2015, the Company revealed that through the investigation of its Special Committee, it had identified errors in accounting pertaining to its classification of expenses and recognition of revenue which led it to restate over two years of financial statements. The Company further revealed the dire state of its declining brands, stunning the market and causing Iconix stock to collapse by more than 57%. Even after the end of the Class Period, Defendants’ fraud continued to be revealed, and the Company had to announce another set of restatements pertaining to its accounting for joint venture transactions. As of March 29, 2016, Iconix’s stock traded at a mere $7.40, an 83% decline from its Class Period high of $44.22 per share.
On March 14, 2016, the Court appointed the City of Atlanta Police Officers’ Pension Fund and the City of Atlanta Firefighters’ Pension Fund as Lead Plaintiffs and Saxena White P.A. as Co-Lead Counsel.
On November 14, 2017, Lead Plaintiffs filed their Second Amended Complaint. Defendants filed their motions to dismiss the Second Amended Complaint on February 2, 2018, Plaintiffs filed their Opposition to the motions on March 30, 2018, and Defendants and BDO filed their Replies on April 27, 2018.
Then, on September 16, 2019, Saxena White successfully negotiated an agreement to settle the claims for $6,000,000 for the benefit of the Class. On September 23, 2019, the Court preliminarily approved the settlement, and then on January 23, 2020, entered final judgment finding the settlement to be fair, adequate and reasonable in all respects.