(CN) – After raising more than $100 million in its initial public offering, pop culture product maker Funko Inc. is being sued for allegedly filing misleading registration statements with the Securities Exchange Commission in connection with its IPO.
Everett, Washington-based Funko sells pop culture products, including figures, accessories, apparel and housewares featuring characters from movies, TV shows, video games, music and sports. The company has over 110 license agreements and sells over 5,000 products.
Numerous Funko directors and underwriters are named as defendants in the class action complaint filed in King County Superior Court.
Funko held the IPO on Nov. 3, 2017, selling 10,416,666 shares at $12 per share, netting $116.4 million after deducting underwriting discounts and commissions. The lawsuit alleges that the company’s final amended registration statement filed on Oct. 23, 2017 with the SEC was “negligently prepared” specifically by giving the misleading impression that Funko’s non-GAAP financial measures were reliable and representative of the company’s true performance, and that Funko’s pre-IPO growth and profitability were stronger than they actually were.
On Nov. 2, 2017, Funko’s first public trading day, the company’s share price opened at $8 per share, down from the IPO price of $12, with various new outlets such as Bloomberg, Yahoo Finance and the New York Times attributing the drop to Funko’s allegedly misleading accounting practices.
The lawsuit adds that just two months after the IPO, Funko stock “reached an all-time low” of $6.93, a decline of 42.25 percent from the IPO price.
Investors are seeking compensatory damages in an amount to be proven at trial. Roger M. Townsend of Breskin Johnson & Townsend PLLC in Seattle and Shannon L. Hopkins of Levi & Korsinsky, LLP in Stamford, Conn., represent the class.