Early shareholder sues Funko, saying it misled investors
Published 1:30 am Monday, April 9, 2018
EVERETT — A shareholder is suing Everett-based toy and collectibles maker Funko over its initial offering of stock last Nov. 3, claiming the company made “misleading and inaccurate” statements about finances.
Keith Jacobs filed the lawsuit in U.S. District Court in Seattle last week and is seeking class-action status. Named defendants include Funko CEO Brian Mariotti, members of the company’s board and investment firms involved in the initial public offering. The company could not be reached for comment late Monday.
Funko’s stock-offering paperwork, filed with the U.S. Securities and Exchange Commission, “was materially false and misleading and omitted to state that Funko’s profits and growth were not as positive as the company represented,” the lawsuit states. Among other things, the SEC paperwork claimed skyrocketing growth, saying Funko had $425.7 million in revenue in 2016 — up from $40 million in 2014.
The lawsuit quotes an opinion piece published by Bloomberg News the week of the initial offering. It questioned the company’s finances. The headline: “Funko Extends Playtime to Its Accounting.”
Funko’s stock began trading a few days later under the ticker symbol FNKO on the Nasdaq market with an initial price of $12 per share, but by the end of the first day, it was trading at $7. On Monday, the stock closed at $8.25 — about 31 percent less than the opening price.
Jacobs, who is represented by the Seattle law firm Nelson Boyd, bought 833 shares of the stock at the opening price of $12, according to the lawsuit. Today that $9,996 investment would be worth about $6,872.
Funko makes figurines of pop culture characters from Marvel to DC Comics to Disney, as well as apparel, home decor and stuffed animals. Its products line the walls of many big-box stores and comic book shops. Funko last summer moved its headquarters from near Paine Field to downtown Everett.
