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Investigations  /  04.29.2019

Investigation of Signet Jewelers Limited

Signet Jewelers Limited Accused of Misrepresenting Credit Quality of Loan Portfolio and Fostering a Culture of Sexual Harassment

According to the complaint, since 2013, Signet presented itself as a prudent lender that made high-quality loans according to stringent credit criteria. However, unbeknownst to investors, Signet was actually a reckless subprime lender that had systematically built a massive portfolio of high-risk consumer loans. As a result of its misrepresentations, analysts repeatedly issued buy recommendations for Signet stock, which more than doubled in price during the class period. Since 2016, as various truths were belatedly revealed, Signet’s stock price has plummeted. The worst of which happened in November 2017 when Signet reported poor financial results, including precipitously declining credit participation rates, which led to Signet’s stock price dropping more than 30% in a single trading day. In December 2017, Signet disclosed that various agencies were investigating Signet for widespread violations of laws prohibiting abusive and deceptive lending practices.

In addition to its deceptive loan portfolio practices, Signet has also been accused of creating a pervasive culture of severe sexual harassment. Scores of sworn declarations detailed, among other things, routine instances of sexual harassment of female subordinates by male superiors, as well as regular instances of female employees being pressured into sexual activity with their male superiors in order to obtain promotions and other economic advances, or even simply to keep their jobs. According to one former Signet employee, “[Signet’s] top level executives fostered this behavior and this culture of sexual discrimination because they actively participated in it.” When this truth was revealed and the stock price nosedived, Signet took the extraordinary action of halting trading. Nevertheless, by the end of February 28, 2017, Signet’s stock price had lost 13% of its value. Signet’s stock price is currently trading at approximately $23.00 per share, or roughly one-sixth of its class period high.

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