On October 22, 2015, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit against Etsy, Inc. ("Etsy" or the "Company") and certain of its officers. The class action, filed in United States District Court, Eastern District of New York, and docketed under 15-cv-02785, is on behalf of a class consisting of all persons or entities who purchased Etsy securities between April 16, 2015 and May 10, 2015 inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
Etsy operates online and offline marketplaces to buy and sell handmade items, vintage goods, and craft supplies. Its platform connects sellers and buyers to sell or buy products for art, home and living, mobile accessories, jewelry, wedding, and others. The company was founded in 2005 and is headquartered in Brooklyn, New York. It has additional offices in Berlin, Germany; Dublin, Ireland; Hudson, New York; London, United Kingdom; Melbourne, Australia; Paris, France; San Francisco, California; and Toronto, Canada.
The complaint alleges that throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) more than 5% of all merchandise for sale on Etsy's website were either counterfeit or constituted trademark or copyright infringement; (2) Brands are increasingly pursuing sellers on Etsy's platform for trademark or copyright infringement, jeopardizing the Company's listing fees and commissions; and (3) as a result of the foregoing, Etsy's public statements were materially false and misleading at all relevant times.
On May 11, 2015, before the market opened for trading, numerous news outlets, including Bloomberg and the Associated Press, reported that Gil Luria, an equity analyst at Wedbush Securities, issued a note downgrading Etsy to "Underperform." In the note, Luria alleged that more than 5% of merchandise sold on Etsy's platform were either counterfeit or violated trademark protections.
As a result of this news, shares of Etsy fell $1.86, or over 8%, on unusually heavy volume, to close at $20.85 on May 11, 2015.