Two Performance Sports Group executives and investors led by the Plumbers & Pipefitters National Pension Fund reached a settlement in a proposed class action accusing the execs of misleading shareholders about sketchy sales tactics that bankrupted the sports gear manufacturer, the fund told a New York federal judge Tuesday.
The agreement was reached out of court, and details of the settlement were not publicly available, but counsel for the fund informed the court in a letter they are "working together to prepare the documentation necessary to effectuate the settlement" and requesting a stay in all deadlines in the case.
Carol V. Gilden of Cohen Milstein Sellers & Toll PLLC, who represents the fund, told Law360 in an email that "[t]his has been a hard fought case by both sides. We are pleased to have reached a settlement in principle to resolve the litigation."
Counsel for the other parties did not immediately respond to requests for comment.
PSG was formed in 2014 after the well-known hockey brand Bauer purchased the similarly iconic baseball gear maker Easton for $330 million. PSG held an initial public offering on the New York Stock Exchange in 2015 and went bankrupt roughly two years later.
The fund claimed in its 2016 suit against PSG and the executives that from the beginning of the roughly 2½-year tenure of PSG's ex-CEO Kevin Davis and former Chief Financial Officer Amir Rosenthal, the pair set out to juice the company's quarterly profits by employing shortsighted sales and accounting tactics that ultimately blew up in their faces.
Led by the Plumbers & Pipefitters National Pension Fund, the investors alleged that under Davis and Rosenthal, PSG's sales departments made a habit of forcing customers — mostly large retail chains — to increase the size of their orders by threatening to revoke steep wholesale discounts and that this strategy led to a buildup of unused inventory that the executives should have known would eat into future sales.
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