We are all fans of Funk Pops, those big-headed little dolls that imitate public figures from all kinds of popular backgrounds. Can you imagine receiving $2,500 just because a toy company didn’t play fair? (Pun intended… you see what I did there?)
Well, wait for what we’re going to tell you, because that’s exactly what could happen if you’re one of the shareholders who sued Funko. The famous manufacturer of collectible figurines, has agreed to pay more than $2.1 million to settle several class action lawsuits in the states of California and Delaware.
Funko to Send $2,500 Checks to Plaintiffs
The plaintiffs alleged in the class action lawsuit that Funko misled them by artificially inflating the value of its stock by hiding crucial information about the company’s problems.
It all started in the year 2023 when a group of shareholders, quite angry with the company, decided that enough was enough. They filed securities fraud lawsuits alleging that former Funko CEO Brian Mariotti and his team concealed information about 28 issues affecting the company’s operations.
These problems ranged from inventory management, the cancellation of slow-moving products, two delays in infrastructure projects, to lower-than-expected sales figures.
The result of these alleged wrongdoings? Funko’s shares were artificially inflated, making investors think that the company was doing better than it really was.
Legal Process of the Funko Class Action Lawsuit: $2.1 Million Agreed
Courts in Delaware and California are now reviewing the proposed settlement. If all goes well and the judge gives his or her OK in November, each plaintiff will receive $2,500. In addition, Funko has committed to implementing new corporate governance measures to improve the relationship with its investors and rebuild trust.
Shareholders have until October 17 to lodge objections to the deal. The court will then hold a hearing on November 15 to confirm the final terms of the settlement.
If the court finally approves the settlement, Funko will not only disburse the money, but is also obliged to take a number of measures to ensure that such situations do not happen again. These measures include better inventory management practices and greater transparency in the information provided to investors.
Another Funko visit to the courts
Not Their First Visit to the Court
This is not Funko’s first rodeo in court. In early May, the company won a motion to dismiss a proposed class-action lawsuit in Washington. In that case, the federal judge ruled that most of Funko’s statements were “forward-looking statements” and that the plaintiffs had not presented sufficient evidence that the company’s management had falsified information.
If you are a current Funko shareholder, your rights may be affected by this resolution. All shareholders holding Funko shares as of March 4, 2024 should keep an eye on the court’s notifications and consider whether they wish to file objections by October 17. The Nov. 15 hearing will be key to determining whether the settlement is fair, reasonable and adequate.
As part of the agreement, Funko has agreed to implement and maintain new corporate governance measures
Non-employee external members of Funko’s Board of Directors have determined that the plaintiffs’ lawsuits and efforts were a substantial factor in the company’s decision to adopt these new practices. These measures not only benefit the company, but also its shareholders, providing greater transparency and accountability.
The settlement hearing is scheduled for November 15, 2024 at 1:30 p.m. at the First Street courthouse, Room 9B, 9th floor, Los Angeles, California. The Honorable Judge Wesley Hsu will preside over the hearing to determine whether the terms of the settlement are fair, reasonable and adequate. It will also be discussed whether to approve the amount of fees and expenses for the plaintiffs’ lawyers, which amounts to $2,150,000 million, and service awards for each of the plaintiffs, who will receive $2,500 each.