Key Takeaways:
- Kahn Swick & Foti launches investigation into Scotts Miracle-Gro (SMG).
- Probe follows a 19% stock drop on August 2, 2023.
- Focus is on potential breaches of fiduciary duties by officers.
Back
Scotts Miracle-Gro Faces Probe After 19% Stock Plunge
(Bloomberg) -- Law firm Kahn Swick & Foti, LLC (KSF) has initiated an investigation into The Scotts Miracle-Gro Company (NYSE: SMG) following a 19 percent drop in its share price last year after the company revealed poor financial results.
"KSF’s investigation is focusing on whether Scotts’ officers and/or directors breached their fiduciary duties to its shareholders or otherwise violated state or federal laws," the law firm announced on May 22. The firm, whose partners include former Louisiana Attorney General Charles C. Foti, Jr., specializes in securities litigation.
The investigation stems from Scotts' August 2, 2023, disclosure of a 6% decline in quarterly sales, a 420-basis-point drop in gross margin, and a $20 million write-down of excess inventory. On the same day, the company cut its fiscal year EBITDA guidance by 25%, triggering a sell-off that sent the stock from $71.44 to $57.86.
The probe adds to the legal pressure on Scotts, which is already facing a securities class-action lawsuit from shareholders over the same disclosures. The KSF investigation could precede another lawsuit, potentially increasing financial liabilities for the consumer lawn care company.
The existing class-action lawsuit charges the company and certain executives with failing to disclose material information to investors. KSF is inviting long-term shareholders with information to assist in its separate investigation.
The investigation introduces new legal risk for Scotts Miracle-Gro shareholders and highlights governance concerns following the sharp guidance cut. The outcome of KSF's probe and the ongoing class-action lawsuit are the next key catalysts for the company's stock.
This article is for informational purposes only and does not constitute investment advice.
[1] Scotts Miracle-Gro Investigation Initiated: Kahn Swick & Foti, LLC Investigates the Officers and Directors of The Scotts Miracle-Gro Company - SMG[2] Goldman Sachs to pay $500 million to settle shareholder lawsuit over 1MDB scandal[3] Scotts Miracle-Gro Investigation Initiated: Kahn Swick & Foti, LLC Investigates the Officers and Directors of The Scotts Miracle-Gro Company - SMG - Business Wire[4] Super Micro Computer 96 Hour Deadline Alert: Kahn Swick & Foti, LLC Remind Investors With Losses In Excess Of $100,000 of Deadline in Class Action Lawsuits Against Super Micro Computer, Inc. - SMCI - Business Wire
