J2 Global, Inc. (JCOM) Accused of Misleading Shareholders
Throughout the relevant period, J2 Global affirmed that it had disclosed all of its related-party transactions as required by the SEC and only detailed a $200 million investment in a related-party investment fund. The Company also repeatedly affirmed its thorough review of impairment on goodwill and reported no impairment charges. However, on June 30, 2020, Hidenburg Research published a report revealing that J2 Global: (i) failed to disclose questionable transactions with related parties; (ii); utilized misleading accounting to hide underperformance and impending impairments; and (iii) failed to disclose a lack of board independence. The report went on further to detail J2 Global and its executives’ history of related party acquisitions and undisclosed self-dealing, including using “$20 million in shareholder capital to acquire a newly-formed entity set up by J2’s then VP of Corporate Development” and that “J2’s former VP of Corporate Development had formed 3 entities out of his house that were then acquired/operated by J2 … that cost/incurred losses totaling an estimated $30 million.” Since this news, J2 Global’s shares trade around $60 per share, representing a decline of 42% from its class period high of $103.47 per share.
