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Peloton executives sued over claims they sold £400m worth of stock amid security row
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Peloton bosses are being charged over claims they sold more than £400 million worth of stock while concealing safety concerns that left dozens of children injured and then killed one.
An investor has accused co-founder and former CEO John Foley, and nine other insiders, of “dumping stock” before the problems came to light.
Shares in the indoor fitness company, which makes stationary bikes and treadmills, have thrived during the pandemic.
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They peaked at $163 in December 2020, but have since crashed to around $10 each.
The downfall was caused in part by 70 reports of adults, children and pets being pulled under Peloton treadmills.
39 children were injured in the trouble, and last March Foley announced that a youth had been killed. In May there was a massive recall of treadmills in the UK and US.
The lawsuit, brought by Peloton shareholder Krikor Arslanian, alleges that Foley would have had “direct and unfettered access to incident reports.”
It said other bosses were “undoubtedly aware” of injuries. Bosses unloaded more than £80 million worth of shares just a week before a three-year-old was trapped under a Peloton treadmill and suffered ‘significant brain damage’.
It is also alleged that Peloton refused to act after the US consumer protection agency CPSC said its treadmill was “so unsafe” that a public warning was necessary.
The treadmills were eventually recalled.
The lawsuit alleges that bosses continued to make misleading statements.
And it said the other insiders ‘joined in Foley’s rush to dump shares’, selling around £415 million worth of shares.
The lawsuit, filed in Delaware, said the Peloton bosses “completely waived” their duties to Peloton and its shareholders. Peloton was asked for comment.