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LeapFrog sued by shareholder

By Legal News Line | Feb 2, 2015

SAN FRANCISCO (Legal Newsline) - A man brought a class action lawsuit against LeapFrog Enterprises on Jan. 23 alleging securities fraud.

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. Those products include 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, the complaint says. 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. 

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

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