Faruqi & Faruqi, LLP’s national practice focuses on complex civil litigation. The firm practices in the areas of Securities, Merger & Transactional, Shareholder Derivative, Antitrust, Consumer Class Action, and Wage & Hour litigation.
The lawsuit has been filed in the U.S. District Court for the District of Utah on behalf of all those who purchased Skullcandy securities between August 7, 2015 and January 11, 2016 (the “Class Period”). The case, Davis v. Skullcandy et al, No. 2:16-cv-00121 was filed on February 12, 2016, and has been assigned to Judge Robert J. Shelby.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by failing to disclose that its financial, revenue, net income and earning guidelines for the third quarter and full year 2015 as issued on the Company second quarter filings were unattainable and by failing to inform the charge and associated tax rate impacts associated with its largest Chinese distributor. Furthermore, the complaint alleges that Defendant Rick Alden and Ptarmagin, an entity controlled by Alden, took advantage of artificially inflated prices to unload a large amount of personal holdings of Skullcandy common stock into the market for a profit.
On January 11, 2016, the Company updated its financial outlook for the fourth quarter 2015, announcing that it had missed its quarterly net sales projections.
After the announcement, Skullcandy’s share price fell from $4.55 per share on January 11, 2016 to a closing price of $3.26 on January 12, 2016 —a $1.29 or a 28.6% drop.