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Colony NorthStar, Inc.

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Case Summary

Company Name
Colony NorthStar, Inc.
Stock Symbol
Class Period
February 28, 2017 to March 1, 2018
Motion Deadline
June 5, 2018
Central District of California

The complaint charges Colony NorthStar and certain of its current and former officers and/or directors with violations of the Securities Exchange Act of 1934.  Colony NorthStar is a global real estate and investment management firm that was formed through a three-party merger of Colony Capital, Inc., NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. in January 2017.

The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects, including that certain of Colony NorthStar’s business segments were performing worse than reported.  As a result of defendants’ false statements and/or omissions, Colony NorthStar securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $14 per share.

Then on March 1, 2018, Colony NorthStar filed its financial results for the fourth quarter and year ended December 31, 2017 with the SEC.  The Company reported that it would record a goodwill impairment charge of $375 million attributable to the Company’s investment management segment.  On the conference call held that day to discuss the results, the Company’s CFO stated that the Company had “recorded a goodwill impairment of $316 million to reflect a lower value in [its] Investment Management business, primarily attributable to [its] retail broker-dealer distribution business.”  He also stated that the Company had written “down management agreement intangible assets by $35 million to reflect amendments to [its] management agreement in [its] healthcare and untreated REIT NH1 net of deferred tax impact.”  On this news, the price of the Company’s shares fell 22%, or $1.78 per share, to close at $6.00 per share on March 1, 2018.

Class Period: February 28, 2017 - March 1, 2018
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