ISS Securities Class Action Services (ISS SCAS) first notified its clients to a newly filed complaint against Peloton Interactive, Inc. on April 30th… these client updates occurred via 1) creation of the case profile on RecoverMax, the ISS SCAS online portal; 2) an automated email alert sent to RecoverMax subscribers; 3) social media postings on Twitter and LinkedIn; and 4) through the weekly blog, “This Week in Securities Class Actions.”
The Peloton case details are as follows…
Investors filed a complaint against Peloton Interactive, Inc., alleging false and misleading statements by executives surrounding safety. The U.S. Consumer Product Safety Commission stated the company’s Treads pose serious risk to public health as multiple incidents of injury against children and pets had occurred. When news of the Commission’s concerns became public, the stock dropped, and investors suffered damages.
|Complaint Filing Date||April 29, 2021|
|Court Venue||USDC New York (Eastern) Case Number 21.02369|
|Defendants||Peloton Interactive, Inc. John Foley, Chief Executive Officer Jill Woodworth, Chief Financial Officer|
|Class Period||September 11, 2020 – April 16, 2021*|
|Allegations||The complaint alleges that defendants, throughout the Class Period, made false and / or misleading statements and / or failed to disclose that: In addition to the tragic death of a child, Peloton’s Tread had caused a serious safety threat to children and pets as well as there were multiple incidents of injury to both;Safety was not a priority to Peloton as defendants were aware of serious injuries and death resulting from the Tread yet did not recall or suggest a halt of the use of the Tread;As a result of the safety concerns, the U.S. Consumer Product Safety Commission (CPSC) declared the Tread posed a serious risk to public health and safety resulting in its urgent recommendation for consumers with small children to cease using the Tread;The CPSC also found a safety threat to Tread users if they lost their balance; andAs a result of the foregoing, defendants’ statements about the Company’s business, operations, and prospects, were materially false and misleading and / or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.|
*On 7 May 2021, investors filed an emended complaint in Federal court, extending the class period through May 5, 2021
Update – May 6, 2021
Following the above notice by ISS SCAS to institutional investors, additional developments occurred as Peloton relented and agreed to a recall for both its Tread+ and Tread products. CEO John Foley issued an apology with an admission that Peloton was incorrect in its initial response to the CPSC request for the product recall. On this news, the stock dropped 15%, wiping about $4.1 billion from Peloton’s market value. Expect additional investor class action suits to follow.
As always, ISS Securities Class Action Services will continue to keep its clients up-to-date with regard to this Peloton case as well as all investor class & group actions around the globe.
By Jeff Lubitz, Executive Director, ISS Securities Class Action Services