Robbins Arroyo LLP: Conn’s, Inc. (CONN) Misled Shareholders According to Class Action
Robbins Arroyo LLP reminds stockholders that an investor of Conn’s, Inc. (NASDAQGS: CONN) filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of Texas Houston Division. The fourth amended complaint, which alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between September 2, 2014 and December 9, 2014, recently survived a motion to dismiss on 13 counts of alleged misstatements. The parties are now briefing a motion for class certification. Conn’s is a retailer of durable consumer products, including appliances, furniture, and mattresses in the United States.
Conn’s Is Accused of Misleading Investors
The class action complaint alleges that defendants failed to disclose to investors that it had lowered its underwriting standards to push larger ticket items onto customers who had little or no ability to pay. By doing this, Conn’s substantially increased its sales revenue based on sales that were only achieved through high-risk consumer credit. According to the complaint, Conn’s hid its debt practices and the negative exposure it would ultimately have on the company’s profits until the third fiscal quarter 2015 when the company revealed an increase in provisions for bad debt and customer delinquency rates and acknowledged that the forecasting of its credit operations had not been acceptably accurate. As a result of this revelation, shares of Conn’s dropped over 40%.
Conn’s credit policies seem to still be a concern. On March 31, 2017, Rent-A-Center announced its Acceptance Now division would not be renewing a referral agreement with Conn’s due to the quality and consistent under-performance of Acceptance Now customer accounts originating from Conn’s stores in terms of delinquencies, losses, and product returns. The press release stated that “Conn’s credit policies … impacted the underperformance and quality of [Acceptance Now] customer accounts originating from Conns stores.”
Conn’s Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Leonid Kandinov at (800) 350-6003, or you can complete the form below and we will contact you directly.