In re The Hain Celestial Group Inc. Securities Litigation

On June 5, 2017, Labaton Keller Sucharow was appointed Co-Lead Counsel in a securities fraud action against Hain Celestial Group, Inc. (Hain or the Company), former President and CEO Irwin D. Simon, former CFO Pasquale Conte, Executive Vice President John Carroll, and former CFO Stephen J. Smith (collectively, Defendants).  The action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) and SEC Rule 10b-5 promulgated thereunder on behalf of all persons and entities that purchased or otherwise acquired the publicly traded Hain's publicly traded common stock from November 5, 2013, through February 10, 2017.  

Hain manufactures, markets, distributes, and sells organic and natural products.  The Company sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and clubs, and drug and convenience stores in approximately 70 countries worldwide.

Defendants are accused of engaging in a fraudulent scheme designed to load Hain’s customers and distributors with excess product at the end of fiscal quarters.  This alleged scheme included “sales concessions” that were unsustainable for Hain’s business because they allegedly stole sales from future quarters and relied on distributors’ continued willingness to accept increasingly more product than they needed and could sell, leading Defendants to offer increasingly larger concessions.

Moreover, Defendants are accused of making materially misleading statements and omissions by failing to disclose that (1) the Company was improperly recognizing customer concessions as revenues, (2) the Company’s financial results were materially false and misleading in violation of generally accepted accounting practices, (3) the company’s internal controls were materially inadequate such that its reported results were not reliable, and (4) as a result, the company was not on track to achieve the financial results it stated it was on track to achieve.

Notably, after the Securities and Exchange Commission (SEC) launched an investigation, Hain conceded that it lacked adequate internal controls to account for its practices and improperly recognized revenue and restated its historic financials, disclosing that they overstated net sales by $167 million.  

On August 17, 2016, three plaintiffs filed separate securities fraud actions against Hain, which the district court consolidated, appointing Lead Plaintiffs Rosewood Funeral Home and Salaman Gimpel.  Judge Arthur D. Spatt of the U.S. District Court for the Eastern District of New York on April 6, 2020.  Upon review, the U.S. Court of Appeals for the Second Circuit reversed the order, and Defendants again moved to dismiss.  On September 29, 2023, Judge Joanna Seybert granted Defendants motion to dismiss, asserting lack of scienter.

On September 29, 2025, the Second Circuit revived the case for the second time, reversing the district court’s dismissal.  It found that falsity, scienter, loss causation, and control person liability were adequately pled, noting that “it would strain credulity to conclude that the Individual Defendants were unaware of [the scheme] and its potentially insidious implications for investors.”  The Second Circuit concluded that “Plaintiffs have adequately alleged that the Defendants made actionable misstatements and omissions in connection with the [ . . . ] scheme and acted with scienter.  Accordingly, this long-pending case should proceed to discovery.”  

The case is In re The Hain Celestial Group Inc. Securities Litigation, No. 16-cv-04581 (E.D.N.Y.).  Labaton Keller Sucharow represents Lead Plaintiff Rosewood Funeral Home.