Funko

Settlement of In re Funko, Inc. Securities Litigation
No. 17-2-29838-7 SEA

The parties have reached a settlement of this action, pending in the Superior Court of the State of Washington in and for King County. The settlement provides for the payment of $14.75 million in cash, and any interest accrued thereon, for the benefit of eligible Class Members.

Specifically, Class representatives alleged the Registration Statement and Prospectus (“Offering Materials”) issued in connection with Funko’s November 1, 2017 Initial Public Offering (“IPO”) contained materially false and misleading statements and omissions concerning Funko’s financial performance and operations. The allegations included, among other things: (i) Funko failed to write off the cost of its abandoned e-commerce platform, which caused certain of the Company’s reported financial metrics to be overstated by $1.4 million for the first three months ending September 30, 2017 in violation of Generally Accepted Accounting Principles (“GAAP”); (ii) Funko relied on channel stuffing to boost sales revenue and the risk and adverse sales and earnings trends the Company experienced as a result of these undisclosed practices; (iii) Funko failed to track obsolete inventory, including “dead stock,” in violation of GAAP, thus overstating the value of its inventory in its financial statements; (iv) Funko failed to adequately disclose the valuation of its intangible assets, including its intellectual property; and (v) Funko failed to properly describe and account for problems related to inventory management and financial prospects in its “risk factors.” Class representatives also contended that as alleged omitted material facts began to be revealed to the market, Funko’s stock price precipitously fell, damaging Class representatives and other Class members in what was labeled as the worst IPO drop in nearly 20 years.

The Class consists of all Persons who purchased or otherwise acquired common stock pursuant to or traceable to the Registration Statement and Prospectus issued in connection with Funko, Inc.’s November 1, 2017 Initial Public Offering. Excluded from the Class are Defendants; the officers, directors, and affiliates of Defendants; members of their Immediate Families; their legal representatives, heirs, successors, or assigns; and any entity in which Defendants have or had a controlling interest. Also excluded from the Class is any Person who timely and validly requested exclusion from the Class.

The settlement is the culmination of six-and-a-half years of vigorously contested litigation against some of the largest, most sophisticated law firms. The recovery in this case totaled approximately 39% of the average damages range – over five times that of the 7.9% median percentage recovery for securities class actions involving Section 11 and/or Section 12(a)(2) claims from 2015-2024.

The settlement was approved by the Court on June 6, 2025.

If you have any questions about the settlement or the litigation, please contact the Shareholder Relations Department at 1-800-449-4900.

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