TYLER – A Texas federal judge granted preliminary approval to an arrangement that requires J.C. Penney to pay $97.5 million to a group of investors who alleged in 2013 the retailer lied about its financial situation.
The group of investors include those who purchased J.C. Penney stock or call options or who sold J.C. Penney options between Aug. 20, 2013, through Sept. 26, 2013.
The plaintiffs alleged that, “during the class period, defendants made false and misleading statements to investors concerning J.C. Penney’s liquidity, need for additional financing, sufficiency of inventory and strength of supplier relationships that artificially inflated J.C. Penney’s stock price and those statements resulted in substantial damages,” to the plaintiffs, the complaint specifies.
J.C. Penney has denied all allegations and maintained that it never made any statements or asked anyone to make public statements to the market that were false or misleading. It also denied it violated the federal securities law. In 2015, a motion to dismiss by J.C. Penney was denied.
Both plaintiffs and defendants agreed to mediation and settlement terms so as not to have to continue towards going through a trial.
As per the preliminary settlement agreement, a portion of the $97.5 million will go towards administrative costs, taxes assessed against the settlement amount and attorney expenses.
Conditions of the settlement also include, “(1) entry of the judgment by the court, as provided for in the settlement agreement; and (2) expiration of the time to appeal from or alter or amend the judgment. Pending the court’s consideration of this settlement, the court has stayed all proceedings, and class members are precluded from bringing or pursuing any litigation that seeks to prosecute the released claims.”
The preliminary approval requires that a settlement hearing be held Nov. 29 before Judge K. Nicole Mitchell at the Tyler Division of the Eastern District of Texas.