JC Penney shareholder sues retailer over share sale
On Tuesday, a JP Penney shareholder sued the struggling retail over a decision to issue more than USD810 million worth of stock. JC Penney decided to issue the said stock to shore up liquidity that had led to a steep drop in its share price, according to a Reuters report.
Alan Marcus filed a lawsuit against JC Penney. The plaintiff said that the retailer had assured the shareholders in the company last August and September that its business was improving. JC Penney also assured its investors that the company had no need to increase its capital. However, the struggling retailer surprised shareholders after it decided to sell 84 million common shares valued USD9.65 per share piece.
Marcus alleged that JC Penney knew it did not have enough liquidity to get through the holiday season without increasing its capital. The shareholder who accused the Texas based firm also added that the company concealed this knowledge to prevent any concerns from investors, added the Reuters report. Marcus also said that the truth had become known to investors after the share price of the company slumped 13.1% at the close of Friday trading. After which, JC Penney announced the terms of its stock offering.
Marcus said he bought 300 JC Penney shares last September 26 prior to the news of the stock offering by the retailer. The plaintiff sought class-action status on behalf of JC Penney's shareholders from August 20 to September 26. Alan Marcus was represented by the class-action specialist firm Robbins Geller Rudman & Dowd, continued the Reuters report.