Molson Coors Brewing Company and its CEO and CFO face a proposed class action lawsuit that alleges investors were harmed financially after an early-February stock drop that stemmed from the revelation that consolidated financial statements issued for year-end 2016 and 2017 “should be restated” and could “no longer be relied upon.”
The lawsuit, which looks to represent those who purchased publicly traded Molson Coors securities between February 14, 2017, and February 11, 2019, traces a timeline of events back to October 2016, when Molson Coors completed its acquisition of SABMiller plc’s more than 50-percent stake in MillerCoors LLC. The following February, the suit says, Molson Coors filed with the Securities Exchange Commission (SEC) its financial results and position for the fiscal year that ended on December 31, 2016. That financial report, according to the lawsuit, assured the company’s internal control over its financial reporting, excluding the internal control over financial reporting of its newly acquired stake in MillerCoors LLC.
On February 14, 2018, the lawsuit continues, the defendants filed with the SEC Molson Coors’ financial results and position for the fiscal year that ended on December 31, 2017, again stating the company’s internal control over financial reporting was effective. According to the complaint, however, these two statements filed with the SEC misinterpreted and failed to disclose certain adverse facts pertaining to Molson Coors’ business and operations.
As the lawsuit tells it, the defendants failed to “properly reconcile the outside basis deferred income tax liability” for Molson Coors’ recent investment in MillerCoors, LLC, which consequently led the company to misreport its net income in its consolidated 2016 and 2017 financial statements to the SEC.
Everything came to a head on February 12, 2019, the lawsuit says, when Molson Coors revealed publicly that its year-end 2016 and 2017 financial statements were off and could no longer be relied upon.
“On this news,” the complaint reads, “shares of Molson Coors fell $6.17 per share or approximately 9.5% to close at $59.19 per share on February 12, 2019, damaging investors.”
The defendants, the lawsuit charges, “knew or deliberately disregarded” the supposedly misleading and/or false statements in Molson Coors’ financial filings. More from the suit:
“The Company and the Individual Defendants acted with scienter in that they knew that the public documents and statements issued or disseminated in the name of the Company were materially false and misleading; knew that such statements or documents would be issued or disseminated to the investing public; and knowingly and substantially participated, or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the securities laws.”