J.C. Penney is set to pay $97.5 million to investors in class action lawsuit

By

Emily Jensen

Published
Jul 26, 2017

Following a Texas judge’s preliminary ruling on Monday, the retailer is set to award $97.5 million to a group of investors who alleged the company misled them in an attempt to inflate share prices.

 
In October 2013, a group of investors led by Alan Marcus claimed the department store chain J.C. Penney misled them about the state of its financial affairs in August and September of that year, leading share prices to reach an all-time low of $12 or $13. Shares for the company have continued to plummet and are currently priced at $5.25.
 
The company has consistently denied the allegations, however it has agreed to the settlement. The sum of $97.5 million represents a payout of 64 cents a share for those purchased when the class action was filed in 2013. However, a portion of the fund will also go to legal fees, with lawyers expected to petition for a third of the total sum.

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Like many department stores and retailers throughout the country, J.C. Penney has faced significant financial struggles as well as changes to its leadership in recent months. Earlier this month,  Edward Record stepped down as CFO. The retailer named former Walmart executive Jeffrey Davis as his replacement.
 
The ruling by U.S. District Judge Robert W. Schroeder III is only a preliminary decision, with the final hearing scheduled for November.