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Signet Jewelers Ltd. has reached a $240 million settlement of class action securities litigation related to the #MeToo movement and an in-house financing program, the bulk of which will be covered by insurance, according to court and financial documents.
The settlement with the Hamilton, Bermuda-based jeweler is subject to court approval, according to documents filed with the U.S. District Court in New York last Thursday in In re: Signet Jewelers Ltd. Securities Litigation. The settlement was first publicized by the D&O Diary.
According to a 10K filing, Signet anticipates its insurers, who are not identified, will pay $207.4 million of the settlement. Signet's brands include Kay Jewelers, Zales and Jared.
On the #MeToo issue, the litigation had charged Signet with misrepresenting the nature of the allegations against it. The company allegedly misleadingly minimized litigation filed against it as concerning “compensation and promotional opportunities” at a few stores when in fact it concerned allegations of sexual harassment by Signet’s most senior executives, according to the memorandum supporting the settlement filed by the lead plaintiffs firm, New York-based Bernstein Litowitz Berger & Grossman LLP.
The second aspect of the litigation involved allegedly false or misleading statements or omissions concerning Signet’s in-house financing program, through which the company made loans to its customers for their jewelry purchases.
The litigation charged that Signet engaged in “reckless” underwriting and had built a large portfolio of high-risk subprime loans that caused the company significant losses.
The U.S. District Court in New York had denied Signet’s motion to dismiss the case in a November 2018 ruling.
The company said in a statement, “Consistent with our core values, we take all of our legal disclosure obligations seriously, and we have rigorous policies and practices to ensure we make required disclosures.
“While we believe this case is without merit, we made a strategic decision to settle the case now, eliminating the risks, ongoing resource needs, and the distraction of this litigation.”
An attorney for Bernstein Litowitz had no comment.