Estee Lauder to Face Lawsuit Over Alleged Shareholder Fraud

Important legal information about the email you will be sending. By using this service, you agree to input your real email address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an email. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. The subject line of the email you send will be "Fidelity.com: "

Estee Lauder to Face Lawsuit Over Alleged Shareholder Fraud

, MT Newswires - 6:26 AM ET 4/1/2025 default

06:26 AM EDT, 04/01/2025 (MT Newswires) -- Estee Lauder ( EL ) is facing a lawsuit accusing the cosmetic company of defrauding shareholders by concealing its reliance on gray-market sales in China, according to a ruling by a federal judge in Manhattan on Monday.

US District Judge Arun Subramanian determined that shareholders had identified several misleading omissions and 'half-truths' in the company's disclosures, particularly regarding the negative impact of a January 2022 crackdown on the 'daigou' gray market.

The lawsuit alleges that Estee Lauder ( EL ) concealed the detrimental effects of the crackdown until Nov. 1, 2023, causing a 19% drop in its stock price.

Judge Subramanian said that Estee Lauder ( EL ) attributed the decline in sales to factors other than the crackdown while reassuring investors that a recovery was imminent.

The defendants also included in the lawsuit are former CEO Fabrizio Freda and former CFO Tracey Travis.

The class action covers shareholders from Feb. 3, 2022, to Oct. 31, 2023.

Estee Lauder ( EL ) did not immediately respond to MT Newswires' request for comment.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.