Cases
FIGS, Inc.
Corporate Governance / Derivative
Overview
Overview
- Date:
- 1/30/2023
- Company Name:
- FIGS, Inc.
- Stock Symbol:
- FIGS
- Class Period:
- FROM 5/27/2021 TO 5/12/2022
- Status:
- Filed
- Filing Date:
- 12/8/2022
- Court:
- U.S. District Court: Central California
Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against FIGS, Inc. (NYSE: FIGS) on behalf of long-term stockholders following a class action complaint that was filed against FIGS on December 8, 2022, with a Class Period from May 27, 2021 to May 12, 2022 and/or pursuant to the May 27, 2021 IPO and/or pursuant to the September 16, 2021 SPO. Our investigation concerns whether the board of directors of FIGS have breached their fiduciary duties to the company.
Founded in 2013, FIGS is a direct-to-consumer healthcare apparel and lifestyle brand that primarily sells its products in the United States through the Company’s digital platforms. While FIGS is best known for its medical scrubs, it also offers other healthcare apparel including lab coats, outerwear, activewear, loungewear, compression socks, footwear, and masks.
On June 1, 2021, FIGS announced the closing of its IPO. Pursuant to the IPO Offering Materials (as defined herein), Defendants issued to the public 30,344,317 shares of FIGS Class A common stock, including the full exercise of the underwriters’ option to purchase an additional 3,957,954 shares, at a price of $22 per share. Of those shares, FIGS sold 4,636,364 shares, and the remaining 25,707,953 shares were sold by Tulco, LLC (“Tulco”), the Company’s largest stockholder.
All sales were issued pursuant to the IPO Offering Materials. However, the IPO Offering Materials and documents incorporated by reference therein contained untrue statements of material fact and omitted to state material facts that were required by applicable law and necessary to make the statements therein not misleading. In particular, the IPO Offering Materials stated that the Company’s Direct-to-Consumer (“DTC”) strategy provides “valuable real-time customer data” that “leads to operational efficiencies throughout our supply chain, inventory management and new product development.”
On September 14, 2021, FIGS issued a press release announcing the SPO, through which Defendants Tulco, Heather Hasson (“Hasson”), and Catherine Spear (“Spear”) would offer for sale approximately 8.8 million shares of FIGS Class A common stock.
On September 20, 2021, Defendants Tulco, Hasson, and Spear completed the SPO. Pursuant to the SPO Offering Materials (as defined herein), Defendants Tulco, Hasson, and Spear issued to the public 8,917,385 shares of FIGS Class A common stock, including the full exercise of the underwriters’ option to purchase an additional 1,337,607 shares, at a price of $40.25 per share.
All sales in the SPO were issued pursuant to the SPO Offering Materials. However, the SPO Offering Materials and documents incorporated by reference therein contained untrue statements of material fact and omitted to state material facts that were required by applicable law and necessary to make the statements therein not misleading. In particular, the SPO Offering Materials reiterated that the Company’s access to significant customer data led to “operational efficiencies throughout [its] supply chain [and] inventory management.” The SPO Offering Materials also stated that the Company’s DTC strategy allowed FIGS to leverage customer data “in all aspects of our business, including apparel design and merchandising, customer acquisition and retention, demand forecasting and inventory optimization.”
The truth began to be revealed on December 10, 2021, before the market opened, when FIGS announced that its Chief Financial Officer (“CFO”) Jeffrey D. Lawrence, would be resigning effective December 24, 2021, less than one year after becoming CFO. In response to this news, the price of FIGS stock declined by $6.57 per share, or over 21%, from a closing price of $31.22 per share on December 9, 2021, to a closing price $24.65 per share on December 10, 2021, on unusually high trading volume.
Then, on May 12, 2022, after the market closed, FIGS announced disappointing financial results and slashed its expected sales, gross margin, and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”). FIGS attributed the poor financial results to “inventory constraints” which the Company stated were “the primary factor affecting our outlook for the full year.” In response to this news, the price of FIGS stock declined by $3.21 per share, or nearly 25%, from a closing price of $12.85 per share on May 12, 2022, to a closing price of $9.64 per share on May 13, 2022, on unusually high trading volume.
As a result of Defendants’ wrongful acts and omissions, and the resulting decline in the market value of FIGS stock, Plaintiff and other Class members have suffered significant losses and damages.
If you are a long-term stockholder of FIGS, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
Founded in 2013, FIGS is a direct-to-consumer healthcare apparel and lifestyle brand that primarily sells its products in the United States through the Company’s digital platforms. While FIGS is best known for its medical scrubs, it also offers other healthcare apparel including lab coats, outerwear, activewear, loungewear, compression socks, footwear, and masks.
On June 1, 2021, FIGS announced the closing of its IPO. Pursuant to the IPO Offering Materials (as defined herein), Defendants issued to the public 30,344,317 shares of FIGS Class A common stock, including the full exercise of the underwriters’ option to purchase an additional 3,957,954 shares, at a price of $22 per share. Of those shares, FIGS sold 4,636,364 shares, and the remaining 25,707,953 shares were sold by Tulco, LLC (“Tulco”), the Company’s largest stockholder.
All sales were issued pursuant to the IPO Offering Materials. However, the IPO Offering Materials and documents incorporated by reference therein contained untrue statements of material fact and omitted to state material facts that were required by applicable law and necessary to make the statements therein not misleading. In particular, the IPO Offering Materials stated that the Company’s Direct-to-Consumer (“DTC”) strategy provides “valuable real-time customer data” that “leads to operational efficiencies throughout our supply chain, inventory management and new product development.”
On September 14, 2021, FIGS issued a press release announcing the SPO, through which Defendants Tulco, Heather Hasson (“Hasson”), and Catherine Spear (“Spear”) would offer for sale approximately 8.8 million shares of FIGS Class A common stock.
On September 20, 2021, Defendants Tulco, Hasson, and Spear completed the SPO. Pursuant to the SPO Offering Materials (as defined herein), Defendants Tulco, Hasson, and Spear issued to the public 8,917,385 shares of FIGS Class A common stock, including the full exercise of the underwriters’ option to purchase an additional 1,337,607 shares, at a price of $40.25 per share.
All sales in the SPO were issued pursuant to the SPO Offering Materials. However, the SPO Offering Materials and documents incorporated by reference therein contained untrue statements of material fact and omitted to state material facts that were required by applicable law and necessary to make the statements therein not misleading. In particular, the SPO Offering Materials reiterated that the Company’s access to significant customer data led to “operational efficiencies throughout [its] supply chain [and] inventory management.” The SPO Offering Materials also stated that the Company’s DTC strategy allowed FIGS to leverage customer data “in all aspects of our business, including apparel design and merchandising, customer acquisition and retention, demand forecasting and inventory optimization.”
The truth began to be revealed on December 10, 2021, before the market opened, when FIGS announced that its Chief Financial Officer (“CFO”) Jeffrey D. Lawrence, would be resigning effective December 24, 2021, less than one year after becoming CFO. In response to this news, the price of FIGS stock declined by $6.57 per share, or over 21%, from a closing price of $31.22 per share on December 9, 2021, to a closing price $24.65 per share on December 10, 2021, on unusually high trading volume.
Then, on May 12, 2022, after the market closed, FIGS announced disappointing financial results and slashed its expected sales, gross margin, and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”). FIGS attributed the poor financial results to “inventory constraints” which the Company stated were “the primary factor affecting our outlook for the full year.” In response to this news, the price of FIGS stock declined by $3.21 per share, or nearly 25%, from a closing price of $12.85 per share on May 12, 2022, to a closing price of $9.64 per share on May 13, 2022, on unusually high trading volume.
As a result of Defendants’ wrongful acts and omissions, and the resulting decline in the market value of FIGS stock, Plaintiff and other Class members have suffered significant losses and damages.
If you are a long-term stockholder of FIGS, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in FIGS. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against FIGS (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for breach of fiduciary duties and other applicable laws.
In making this agreement, BESPC is relying upon your representation that you held the Company’s shares during the period from 5/27/2021 to 5/12/2022 (the “Relevant Period”) and that you continue to hold Company shares. Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other shareholders or the Company concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you held the Company’s shares during the period from 5/27/2021 to 5/12/2022 (the “Relevant Period”) and that you continue to hold Company shares. Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other shareholders or the Company concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.No Special Treatment
You understand that in the event we secure a recovery, you will not receive any special treatment or receive a greater share of any recovery based on your service as a named plaintiff. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.