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Wednesday, January 29, 2020

LeapFrog sued over alleged securities fraud

By Carol Ostrow | Jan 30, 2015

Shutterstock 155812997

A man brought a class-action suit against LeapFrog Enterprises, Inc. on Jan. 23 alleging securities fraud due to misleading or false statements.

Abere Newett filed the suit against the educational toy maker, its CEO John Barbour and Chief Financial Officer Raymond L. Arthur, alleging they failed to properly advise the public of its financial status.

LeapFrog develops educational children’s entertainment material, including multimedia learning platforms, related branded content and toys, such as tablets, game systems and reading/writing systems. 

The defendants allegedly withheld significant information from the investing public, causing an unrealistically positive assessment of the company’s financial well-being between May 5 and Jan. 22. 

LeapFrog’s third-quarter report, issued on Jan. 22, revealed significant shortfalls. Barbour identified the causes as a decline in holiday sales, delayed delivery of a new video game system launch, lower sales and prices, and stricter inventory procedures among partner retailers.

Newett alleged he and other consumers would not have purchased company shares at overvalued prices had they been properly informed.

The plaintiff seeks compensatory damages, reasonable costs and expenses, including counsel and expert fees.

He is represented by Lionel Z. Glancy, Robert V. Prongay and Casey E. Sadler, of Glancy, Binkow & Goldberg LLP in Los Angeles, California. 

U.S. District Court Northern District of California case no. 3:15-cv-00347-JCS.

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