NEW YORK, May 13, 2021 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Sequential Brands Group, Inc. ("Sequential" or the "Company") (NASDAQ: SQBG). Such investors are advised to contact Robert S. Willoughby at [email protected] or 888-476-6529, ext. 7980.
The investigation concerns whether Sequential and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.
On November 9, 2017, Sequential issued a press release entitled "Sequential Brands Group Announces Third Quarter 2017 Financial Results" (the "November 2017 Press Release"). The November 2017 Press Release announced that "[i]ncluded in the net loss for the third quarter 2017 were non-cash impairment charges of $36.5 million for indefinite-lived intangible assets related to the trademarks of five of the Company's non-core brands[,]" marking the first time the Company noted its need for impairment charges related to intangibles and its assets generally. On this news, Sequential's stock price fell $36.80 per share, or 38%, to close at $58.00 per share on November 9, 2017.
Then, on February 28, 2018, Sequential issued a press release announcing a "goodwill adjustment represent[ing] a one-time, non-cash charge of $304.1 million that was driven by the Company's stock price during the fourth quarter—as well as the increase in the Company's book value related to tax reform—which results in an assessed fair value of equity that was significantly below its net book value." On this news, Sequential's stock price fell $6.80 per share, or 8%, to close at $76.00 per share on February 28, 2018.
Finally, on December 11, 2020, the U.S. Securities and Exchange Commission ("SEC") filed a complaint charging Sequential "with failing to impair its goodwill as required by accounting principles and the federal securities laws." The SEC complaint alleged, among other things, that "[b]y avoiding an impairment to its goodwill in 2016, Sequential's financial statements and SEC filings materially understated its operating expenses and net loss and materially overstated its income from operations, goodwill, and total assets. This created a false impression of its financial health and ability to execute on its business plan. Sequential carried forward its material errors, resulting in material misstatements and omissions in Sequential's financial statements and SEC filings for the first three quarters of 2017." On this news, Sequential's stock price fell $2.03 per share, or roughly 11%, to close at $16.20 per share on December 11, 2020.
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