Hain Securities Class Action
The health food company Hain Celestial Group was recently hit with a securities class action lawsuit. For more information, visit Battea’s Hain Celestial Group case summary.
The suit alleges that the company made false or misleading statements or failed to disclose a number of issues with its business operations, including lack of internal control over its financial reporting and failure to report certain revenue as a result of concessions it made to some distributors. Once these issues were revealed, the company’s stock price took a serious hit and caused harm to its investors. The suit has a class period from November 9, 2015 to August 15, 2016.
A closer look at Hain’s issues
The Hain Celestial Group, which makes the well-known Celestial Seasonings brand of teas among other products, announced in mid-August that it would have to delay the release of its annual earnings report, according to a report from the Motley Fool. This was because it discovered accounting problems related to the aforementioned concessions it had made. It is now going through an internal review from an independent party before it releases its earnings report for the final fiscal quarter. When the company announced that it had discovered these issues, its stock fell about 30 percent in short order.
The internal problems brought it out of compliance with NASDAQ rules, and Hain was given 60 days to submit a plan to NASDAQ for how it would get back into compliance. The company expects that it will be able to put together that type of plan within the given time frame, according to The Wall Street Journal. It’s believed that Hain sees its newly discovered revenue reporting issues as being related to the systems it has in place to make sure its financial statements are correct. Under NASDAQ rules, participating companies must review their internal processes annually to make sure they’re running as they should, and to both report and fix any issues these reviews turn up.
How was the stock price affected?
As a result of the disclosure of problems with the financial review process, made on August 15, Hain’s stock price dropped precipitously and almost immediately, according to Google Finance. That announcement was made on a Monday, and it had closed the previous Friday (August 12) at $55.35 per share. That had been a recent all-time high, as the company’s stock price improved over the course of almost the entire summer.
However, a mere two days later, the stock price closed at just $37.79 and continued to fall. At one point on August 31, its price had dipped to a recent low of $35.62, and has only recovered somewhat since then. It closed September 7 at $36.37 per share.
Interestingly, the company has generally seen more success in August over the past two years than at any other points. The stock’s all-time high was observed in August 2015, at $68.32.
For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or firstname.lastname@example.org.