Aaron’s Inc. Class Action Lawsuit
- Company Name
- Aaron’s Inc.
- Stock Symbol
- Class Period
- March 2, 2018 to February 19, 2020
- Southern District of New York
On February 28, 2020, the Aaron’s Inc. securities class action lawsuit was filed charging Aaron’s and certain of its officers with violations of the Securities Exchange Act of 1934. The Aaron’s securities class action lawsuit was commenced in the Southern District of New York on behalf of purchasers of Aaron’s securities between March 2, 2018 and February 19, 2020 (the “Class Period”) and is captioned Stein v. Aaron’s Inc., et al., No. 1:20-cv-01796.
Aaron’s operates as an omni-channel provider of lease-purchase solutions to underserved and credit-challenged customers and engages in the sale, lease ownership, and specialty retailing of various products. Aaron’s operates in three reportable segments – Progressive Leasing (“Progressive”), Aaron’s Business, and Vive Financial, LLC (“Vive”). The Progressive and Aaron’s Business segments are subject to federal regulatory agency oversight and scrutiny, including by the Federal Trade Commission (“FTC”).
The Aaron’s securities class action lawsuit alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose: (i) that Aaron’s had inadequate disclosure controls, procedures, and compliance measures; (ii) that, consequently, the operations of Aaron’s Progressive and Aaron’s Business segments were in violation of the FTC Act and/or relevant FTC regulations; (iii) that, consequently, Aaron’s earnings from those segments were partially derived from unlawful business practices and were thus unsustainable; and (iv) the full extent of Aaron’s liability regarding the FTC’s investigation into its Progressive and Aaron’s Business segments, Aaron’s noncompliance with the FTC Act, and the likely negative consequences of all of the foregoing on Aaron’s financial results. As a result of this information being withheld from the market, Aaron’s securities traded at artificially inflated prices during the Class Period, with the price of its stock reaching a high of $80 per share.
On July 26, 2018, Aaron’s filed its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission for the quarter ended June 30, 2018. The Form 10-Q disclosed that, in July 2018, Aaron’s received civil investigative demands (“CIDs”) from the FTC requesting the production of documents and answers to written questions to determine whether disclosures related to financial products offered by Aaron’s through its Aaron’s Business and Progressive segments were in violation of the FTC Act. On this news, Aaron’s stock price fell $5.38 per share, or 11%, to close at $43.47 per share on July 27, 2018.
Then on February 20, 2020, Aaron’s announced its financial results for the quarter and year ended December 31, 2019. Aaron’s reported that Aaron’s Progressive segment had reached an agreement in principle with FTC staff regarding the CID Aaron’s had received in July 2018. Aaron’s advised investors that “[u]nder the proposed agreement, which requires final approval by FTC Commissioners and the U.S. District Court for the Northern District of Georgia, Progressive will make a payment of $175 million and enhance certain compliance-related activities, including monitoring, disclosure and reporting requirements.” On this news, Aaron’s stock price fell $10.70 per share, or 19%, to close at $45.45 per share on February 20, 2020.
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