Pandora’s dramatic stock plunge in 2011—when its shares lost nearly two-thirds of their value in one day—is now the subject of a lawsuit in its home base of Denmark.
On July 18, a group of 36 institutional investors filed suit in a Danish court against the charm manufacturer, arguing the company did not notify them that sales had dropped fast enough, according to a statement from Dutch law firm Deminor. Also cited in the suit were the company’s former board and CEO, and its current CEO Allan Leighton, who then served as chairman.
The company had originally predicted 2011 sales would grow from 30 to 40 percent. But in August of that year, it downgraded that prediction to zero percent, causing the stock to crash and lose two-thirds of its value in one day, costing investors some $2.2 billion. The poor figures ultimately led to the departure of its CEO, Mikkel Vendelin Olesen.
The suit, which seeks compensation for the losses, is the latest in a series of headaches for the company over the 2011 debacle. In November, the Danish public prosecutor indicted the company for a breach of the Danish Securities Trading Act—failing to inform the market about the sales drop a timely way.
In a statement in response to the indictment, Pandora maintained “it acted properly during a swift and unexpected downturn in sales” and that it has acted in full compliance with all rules and regulations.