NYPD pension fund sues Amazon over ‘artificially inflated’ stock prices

The pension fund for thousands of New York City police detectives has filed a lawsuit against Amazon in federal court, claiming the company and its executives misled investors and hid losses spurred by the company’s “excessive” expansion during the coronavirus pandemic.

According to the suit, the Detectives’ Endowment Association (DEA) Annuity Fund contends it purchased nearly $3 million in shares of Amazon stock “at artificially inflated prices” before the company eventually revealed $3.8 billion of losses in 2022’s first-quarter earnings report.

“Defendants failed to disclose and actively concealed from investors that rather than being necessary to meet short- and long-term demand, Amazon’s escalated and rapid expansion had created an expensive and unnecessary over-expansion situation that exposed Amazon to massive losses that threatened to cause, and did cause, the material and significant depletion of its earnings,” the lawsuit read.

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The reported first-quarter losses drove shares down approximately 10% in after-hours trading.

Amazon CEO Andy Jassy, CFO Brian Olsavsky, and Head of Investor Relations David Fildes are listed as the primary defendants in the case.

The police pension fund filed the suit as a class action on behalf of all “persons and entities that acquired Amazon common stock between July 30, 2021 and April 28, 2022.”

Amid Amazon’s significant losses — the first time the company had quarterly losses since 2015 — the head of Amazon’s consumer business, Dave Clark, stepped down July 1 to “pursue other opportunities,” according to an Amazon press release. He left just six weeks after the company’s losses were published.

In an effort to maintain artificially high market prices, the lawsuit claims Amazon employed devices, schemes, and artifices to defraud while making untrue statements about the value of the stock.

“Had [the] plaintiff and the other members of the class known the truth regarding Amazon’s financial results, which was not disclosed by [the] defendants, [the] plaintiff and other members of the class would not have purchased or otherwise acquired their Amazon common stock, or, if they had acquired such securities during the class period, they would not have done so at the artificially-inflated prices that they paid,” the suit read.

Alongside the suit, a coalition of labor unions also filed a complaint with the U.S. Securities Exchange Commission last week, contending Amazon misled investors by publicly sharing “cherry-picked and outdated data” about its warehouse injury rates last spring, according to Geekwire.

Amazon has declined to comment on the situation.

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