Last Thursday when we reported [6]the surreal sequence of investor disinformation events facilitated by both JCP's management team, CNBC and a conflicted "source", we said that "it was only a matter of time before lawyers started making phone calls, and before someone got implicated in what in retrospect can be construed as very serious, and costly, 10(b)-5 securities fraud." Sure enough, it took a little under 48 hours before the first (of many) lawyers smelled blood, and resulted in Shareholder Rights Law Firm Johnson & Weaver, LLP starting an investigation " if a securities violation was committed by J.C. Penney Company, Inc., when it made specific representations about the company's liquidity and the need to raise cash." The answer: yes. The only question is who is guilty, and how much the settlement will be for all those who lost cash on the second most active trading day of JCP stock in history (followed only by the next trading day in which the stock tumbled another 6% from the Goldman follow on offering price to a fresh 13 year low).
From BusinessWire:
Shareholder Rights Law Firm Johnson & Weaver, LLP is investigating if a securities violation was committed by J.C. Penney Company, Inc., (NYSE: JCP) when it made specific representations about the company's liquidity and the need to raise cash.
On an August 20, 2013 investor conference call, J.C. Penney's CFO responded when asked about any additional outside liquidity needs, "Certainly as we look through the end of the year, the $1.5 billion of liquidity that we have projected we're not assuming that we need any additional financing". Other recent statements have been reported by senior management, including the Company's CEO, stating that it did not see conditions for the rest of the year where it would need to raise liquidity.
On September 26, 2013, J.C. Penney announced that it had commenced an underwritten public offering of 84 million shares of its common stock. Based upon the closing price of $10.42 on September 26, 84 million JCP shares would sell for about $875 million. On this news JCP stock closed down 13% the next trading day to $9.05.
If you are a J.C. Penney shareholder and are interested in learning more about the investigation or your legal rights and remedies, please contact lead analyst Jim Baker (jimb@johnsonandweaver.com [7]) at 619-230-0063.
Johnson & Weaver, LLP is a nationally recognized shareholders' rights law firm. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit http://www.johnsonandweaver.com [8].