In re Aaron’s, Inc. Securities Litigation
Status: Ongoing Case
On September 18, 2017, Labaton Sucharow was appointed as co-lead counsel in a securities class action lawsuit against Aaron’s, Inc. (NYSE: AAN), and certain of its senior executives. The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and U.S. Securities and Exchange Commission (SEC) Rule 10b-5 promulgated thereunder, on behalf of all investors who purchased or otherwise acquired Aaron’s common stock between February 6, 2015 and October 29, 2015, inclusive (the class period). Aaron’s is a retailer of furniture, consumer electronics, computers, appliances and household accessories. Aaron’s operates a rent-to-own business, which allows customers to lease products in exchange for a weekly or monthly payment, with the option to purchase at some point during the agreement.
On October 27, 2017, the lead plaintiff filed a consolidated complaint that alleges the defendants violated provisions of the federal securities laws by issuing false and misleading statements about the accuracy of a proprietary algorithm that Aaron’s used to make leasing decisions, Aaron’s ability to timely collect on delinquent accounts, and the attendant negative impact on the company’s finances. Aaron’s revealed to the market in October 2015 that its underwriting algorithm had not functioned properly during an extended ten-week period in February, March, and April 2015. Rather than reduce or stop use of the algorithm until the problem was resolved, defendants expanded the use of the algorithm and touted its functionality to investors. As a result, the leases originated during this time period carry a significantly higher probability of default. Aaron’s also experienced a separate, distinct, but also undisclosed, problem in the second and third quarters of 2015 when the company’s lease management system caused certain delinquent accounts to go undetected.
The case is In re Aaron’s, Inc. Securities Litigation, No. 17-cv-2270 (N.D. Ga.). Labaton Sucharow represents the lead plaintiff, Arkansas Teacher Retirement System, as co-lead counsel. The defendants are Aaron’s and certain of its senior executives.