Signet Jewelers Ordered to Face Shareholders’ Fraud Lawsuit
(Bloomberg) -- Signet Jewelers Ltd. must face a securities-fraud lawsuit filed by shareholders alleging the company misled them about the health of its credit portfolio and allegations of sexual discrimination at the firm, a federal judge in New York ruled.
U.S. District Judge Colleen McMahon on Monday denied the Akron, Ohio-based jeweler’s request to dismiss the lawsuit, which was filed by the Public Employees Retirement System of Mississippi.
Signet had argued that statements about the health and management of its credit portfolio amounted to “puffery or inactionable statements of opinion.” The judge rejected the claim, saying that many of the challenged comments came in direct response to questions about the portfolio and were “purported statements about the health of the business.”
McMahon also dismissed the company’s contention that its repeated disclosure of the sexual misconduct allegations shows it didn’t knowingly defraud investors. Signet didn’t have to disclose “salacious” allegations, but the company was required to provide a “brief but accurate” description of the facts that underlie the claims, the judge said.
While Signet said the claims related to discriminatory compensation and promotional opportunities in stores, it’s alleged in the lawsuit that they were about “pervasive sexual harassment that reached the highest offices in the company,” McMahon wrote.
The ruling “on a preliminary motion did not include any findings on the claims, which the company asserts are without merit,” Signet spokesman David Bouffard said in a statement. “We will vigorously defend against the claims.”
Easy credit helped make Signet one of the world’s largest jewelry companies, but as far back as 2016 some analysts said it was pushing the limits of credit and accounting so far that it was looking less like a jewelry business and more like a finance company -- a sort of Money Store of diamonds.
In 2017, Signet began selling off its loan portfolio and disclosed that the New York Attorney General was investigating the company for alleged widespread violations of laws prohibiting deceptive lending practices.
The case is In Re Signet Jewelers Ltd. securities litigation, 16-cv-6728, U.S. District Court, Southern District of New York.
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