Costco, Top Executives Hit with Stock-Drop Class Action in Washington

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A proposed class action lawsuit has been filed by a Costco common stockholder against the warehouse retailer and its CEO and CFO over allegations that shareholders were deceived into purchasing securities at artificially inflated prices.

The 22-page lawsuit describes an allegedly fraudulent scheme and course of business by which the defendants disseminated materially false and misleading statements and concealed adverse information with regard to Costco’s overall operations and prospects. More specifically, the complaint charges the defendants, for the period between June 6 and October 25, 2018, misrepresented in Costco’s financial and operating results for the third fiscal quarter 2018 that the retailer “lacked effective internal control over financial reporting.” As the truth emerged in October 2018, the lawsuit says, Costco stock prices sank roughly 5.55 percent.