Robbins Geller Rudman & Dowd LLP today announced that a class action has been commenced in the United States District Court for the Eastern District of Texas on behalf of purchasers of J.C. Penney Company, Inc. common stock during the period between August 20, 2013 and September 26, 2013.
The complaint charges JCPenney and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that throughout the Class Period, defendants violated the federal securities laws by disseminating false and misleading statements to the investing public in connection with the company’s finances. Specifically, defendants failed to disclose and/or misrepresented adverse facts, including that the company would have insufficient liquidity to get through year-end and would require additional investments to make it through the holiday season, and that the company was concealing its need for liquidity so as not to add to its vendors’ concerns. As a result of defendants’ false statements, the lawsuit alleges, JCPenney’s stock traded at artificially inflated prices during the Class Period, reaching a high of $14.47 per share on September 9, 2013.
Then, on September 26, 2013, analysts reported that the company would need to take on additional debt to ensure that it had enough cash to keep its business operations going. On September 27, 2013, JCPenney issued a press release announcing the pricing of 84 million shares of its common stock at $9.65 per share in a secondary offering, stating that “[t]he Company intends to use the net proceeds from the offering for general corporate purposes.” On this news, JCPenney’s stock fell $1.37 per share to close at $9.05 per share on September 27, 2013, a one-day decline of 13% on volume of 256 million shares.
Robbins Geller represents U.S. and international institutional investors in contingency-based securities and corporate litigation. With nearly 200 lawyers in nine offices, the firm represents hundreds of public and multi-employer pension funds with combined assets under management in excess of $2 trillion.