SAN DIEGO and NEW YORK, June 26, 2015 /PRNewswire/ -- Shareholder rights law firm Robbins Arroyo LLP announces that a federal securities fraud class action complaint was filed in the U.S. District Court for the Southern District of New York. The complaint alleges that officers and directors of Iconix Brand Group, Inc. (NASDAQ: ICON) violated the Securities Exchange Act of 1934 between February 20, 2013 and April 17, 2015, by making materially false and misleading statements about Iconix's business prospects. Iconix is a brand management company that owns, licenses, and markets a diverse portfolio of consumer brands in the United States and internationally.
View this information on the law firm's Shareholder Rights Blog:
Iconix Engages In Irregular Accounting Practices
Iconix purchases licensing rights to consumer fashion brands for a fixed acquisition cost and licenses the right to use the brands in exchange for licensing fees. According to the complaint, in accounting for its gains on these licensing fees, Iconix failed to properly account for the acquisition cost of the underlying intellectual property licensing rights.
Iconix officials expressed to investors that free-cash flow was an integral part of the company's business model and that this model proved to be successful for Iconix. However, the complaint alleges that Iconix engaged in irregular accounting practices related to the booking of its joint venture and profits, free cash flow, and organic growth, and as a result, its earnings and revenues were overstated. These misstatements created an unrealistically positive assessment of Iconix and its business, and caused the price of the company's securities to be artificially inflated.
On March 30, 2015, the company announced that its Chief Financial Officer had resigned. On this news, the company's stock fell $2.72 per share, or 7%, to close at $33.67 per share on March 31, 2015. Then, on April 17, 2015, Iconix announced that its Chief Operating Officer had resigned. On April 20, 2015, Roth Capital Partners published an Equity Research Note that revealed Iconix's accounting irregularities and uncertainties surrounding the company's prior reporting of free cash flow and practice of booking joint venture gains as revenue. On this news, shares of Iconix declined an additional $6.62 per share, over 20%, to close at $25.41 per share on April 20, 2015.
Iconix Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, [email protected], or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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SOURCE Robbins Arroyo LLP