Pension Funds Sue Hasbro for Allegedly Misleading Investors

A pension fund-led class action lawsuit against Hasbro Inc. accuses the toy company of misleading investors about its financial health to artificially inflate its stock price while its CEO and CFO sold $147 million in personal shares.

According to the lawsuit, Hasbro’s executives allegedly made false statements, or failed to disclose adverse facts known to them about the company, to deceive the investing public regarding its prospects and business. It alleges that this propped up the stock’s price, allowing CEO Brian Goldner and CFO Deborah Thomas to collectively sell more than $147 million of their personally held Hasbro stock to the “unsuspecting public.”

The lawsuit argues that because of the “fraudulent scheme,” anyone who purchased Hasbro stock between April 24, 2017, and October 23, 2017, did so at artificially inflated prices. The lead plaintiff is the City of Warren Police and Fire Retirement System.

The plaintiffs claim that because Goldner and Thomas had the authority to control the contents of Hasbro’s quarterly reports, shareholder letters, press releases, and presentations, they knew that the “adverse facts” were being concealed from the public, and that “the positive representations being made were then materially false and misleading.”

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The suit also argues that Goldner and Thomas knew that toy retailer Toys “R” Us, which accounted for 9% of Hasbro’s consolidated net revenues in fiscal year 2016, was in far worse financial condition than was being publicly reported.

Hasbro “knew or recklessly disregarded that Toys “R” Us would have to dramatically scale back its operations or file for bankruptcy and liquidate,” said the lawsuit, adding that “as a result, Hasbro would have to increase its financial support of Toys “R” Us or risk losing one of its most important customers.”

It also said that at the same time, Hasbro was experiencing “significant undisclosed adverse sales issues” in the UK and Brazil, which are two of the company’s main markets. The plaintiffs argue that because of the combination of these issues, the company “lacked a reasonable basis for their positive statements about Hasbro, its revenues, earnings, and prospect.”

The lawsuit cited a July 2017 Hasbro earnings press release that said the company “entered the important second half of the year with strong consumer momentum, a robust and diverse entertainment slate, and compelling new brand initiatives.”

The Pawtucket, Rhode Island-based company denied the allegations, according to the Providence Journal, saying “the claims have no merit and we intend to vigorously defend against them.”

Tags: Brian Goldner, City of Warren Police and Fire Retirement System, Deborah Thomas, Hasbro, Stock

Sanjeev Daga

Harvard Management Co. (HMC), which manages the investment portfolio for Harvard University’s endowment, has poached Columbia University Investment Management Co. (CIMC) COO Sanjeev Daga as its new COO, effective February 2019.

“I had the pleasure of working with Sanjeev for more than 13 years at CIMC and we are thrilled that he will be joining the team,” HMC CEO Narv Narvekar said in a release. “His experience building and managing an extraordinary operations and IT effort at a leading endowment will be a great asset as we continue our organizational transition.”

Daga, who has been COO of CIMC since 2003, will replace COO Bob Ettl, who is retiring. Prior to joining CIMC, Daga was a senior vice president of risk management for Royal Bank of Scotland (RBS), and before that he was a risk manager at National Westminster Bank. He has an M.B.A. from the New York University Stern School of Business, and a B.A. from Rutgers University.

“I am excited for the opportunity to join HMC and build on the work that Narv and the team have undertaken over the last two years,” said Daga. “I look forward to meeting with members of the team in the coming months and learning about the challenges and opportunities ahead, so that I can hit the ground running in February.”

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Ettl has been managing director and COO at HMC since October 2008. Before joining HMC, Ettl was a managing director at Allianz Global Investors, and prior to that he was an executive vice president at Pacific Investment Management Co. (PIMCO).

“After a long, successful career in finance, Bob made clear to me a while ago that he was looking forward to retirement,” said Narvekar. “I have been incredibly fortunate to have him as a partner in both the assessment and implementation of the strategy we developed.”

Ettl will stay on with HMC through early 2019 to help Daga transition into the role, and then continue as an adviser until the end of the year.

HMC also announced that CFO Kevin Shannon will retire at the end of 2019 after 10 years at the firm. The company said Daga will determine whether a new CFO is needed, or if the responsibilities of the position will be distributed among the existing team.

Tags: Endowments, Harvard, Narv Narvekar, Sanjeev Daga