J.C. Penney agreed to pay $97.5 million and make other concessions to a class of investors who had accused the retailer of lying about its financial health.
Just two months after U.S. District Judge Robert Schroeder adopted a magistrate judge’s ruling certifying a class of J.C. Penney investors, the two sides reached a deal and have hammered out terms, according to a notice of settlement filed by the parties. The parties are working on a motion for preliminary approval and other settlement documents to submit to the court.
Investors, who first filed suit in October 2013, claim that their decision to purchase stock was the result of false statements made by J.C. Penney executives in August 2013 about how much cash the company would have on hand at the end of the year. The class includes investors who purchased company stock from Aug. 20 to Sept. 26, 2013.
In September 2013, a Goldman Sachs report on the retailer’s liquidity issues, as well as J.C. Penney’s subsequent announcement of plans to issue nearly $1 billion in new shares to deepen its reserve, caused the company’s stock price to drop, according to the suit.
The case is Marcus v. J.C. Penney Co. Inc. et al., case number 6:13-cv-00736, in the U.S. District Court for the Eastern District of Texas.