WPG Investors File Class Action Lawsuit After Stock Plummets on Forbearance Reports

A real estate investment trust made positive statements about its business operations when its financial condition was deteriorating rapidly, a new class action lawsuit alleges.

Plaintiff Randy Slipher filed the class action lawsuit against Washington Prime Group, Inc. (WPG) Monday in an Ohio federal court, alleging violations of the Securities Exchange Act of 1934.

Slipher is looking to represent anyone who acquired WPG securities between Nov. 5, 2020 and March 4 this year. 

WPG is a self-managed and self-administered real estate investment trust that owns properties and conducts operations through Washington Prime Group, L.P. (WPG L.P.). 

Slipher says, on Feb. 16, 2021, WPG revealed that WPG L.P. had “elected to withhold an interest payment of $23.2 million due on February 15, 2021.” 

WPG L.P allegedly had a 30-day grace period to make the interest payment before it was classed as a default, and that if it did default it could result in a cross-default with respect to some of its other indebtedness, the claim states.

On this news, the company’s stock price fell $4.59, or 38 percent, to close at $7.49 per share.

Weeks later, on March 4, Bloomberg reported that WPG was preparing a potential bankruptcy filing after skipping an interest payment, the class action states.

The company’s stock price then fell $3.77, or 60 percent, to close at $2.51 per share.

Slipher says, on March 16, WPG told investors it had entered a forbearance agreement and stated there was substantial doubt as to its ability to continue as a going concern. 

“The Company confirmed that it had engaged in discussions for a financial restructuring,” Slipher says. 

He alleges WPG failed to tell investors its financial condition was deteriorating substantially and, as a result, there was significant uncertainty about its ability to meet its capital structure obligations as they became due.

“As a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis,” he says. 

Slipher is seeking certification of the class, damages, costs, expenses and a jury trial.

Meanwhile, other companies are also facing class action under the Securities Exchange Act for misleading investors about the states of their businesses.

In May 2021, wireless networking company Ubiquiti was accused of downplaying a major data breach, with investors saying when the truth became public, its stock plummeted. 

What do you think of WPG’s handling of information about its financials? Let us know in the comments!

The plaintiff is represented by Andrew Kimble of Biller & Kimble LLC and Robert V. Prongay, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP.

The WPG Securities Exchange Act Class Action Lawsuit is Slipher et al., v. Washington Prime Group, Case No. 2:21-cv-02757-JLG-KAJ, in the U.S. District Court District of Ohio.

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