US Government (DOJ, DHS & SEC) investigating Peloton over Peloton Tread+ recall & safety issues

Yesterday, Peloton released their quarterly earnings report, and discussed their performance for the past 3 months with investors. Today, as is the normal practice, Peloton released an additional disclosure form called their 10-K, which is an “annual report which provides a comprehensive overview of the company for the past year”

In today’s filing, and as first noticed by Reuters, Peloton has revealed that multiple US government agencies have subpoenaed Peloton for documents related to either the safety issues of the Peloton Tread+ that led to the recall, or their disclosures related to the issues. This was disclosed in their 10-K report in a section about risks to the company related to laws, regulations, and legal proceedings. It stated:

In addition, the DOJ and U.S. Department of Homeland Security (“DHS”) have subpoenaed us for documents and other information related to our reporting of the injuries associated with our products and the SEC is also investigating our public disclosures concerning these matters. We have also been named in several lawsuits related to these recalls.

Specifically, Peloton notes how both the US Department of Justice and the US Department of Homeland Security are asking for documents around how Peloton reported injuries to US regulators. Separately – the US Security & Exchanges Commission is investigating how & when Peloton disclosed information, to see if they followed rules & laws around giving proper information to investors.

Peloton has stated they intend to cooperate with the investigations:

We intend to cooperate fully with each of these investigations, and at this time, we are unable to predict the eventual scope, duration or outcome of the investigations

The filing goes on to note several lawsuits that have been filed against Peloton as well, many of which we’ve reported on:

In April 2021, purported Peloton Member Shannon Albright filed a putative class action lawsuit against us, alleging violations of various California state laws related to the Tread+ and the matters contained in the CPSC warning, and plaintiff Ashley Wilson filed (and later amended) a putative securities class action lawsuit against us, our Chief Executive Officer and our Chief Financial Officer , purportedly on behalf of a class consisting of those individuals who purchased or otherwise acquired our Class A common stock between September 11, 2020 and May 24, 2021, alleging that the defendants made false and/or misleading statements in violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b- 5 promulgated thereunder. In May 2021, Leigh Drori filed a putative securities class action lawsuit against us, our Chief Executive Officer, and our Chief Financial Officer purportedly on behalf of a class consisting of those individuals who purchased or otherwise acquired our common stock between September 11, 2020 and May 5, 2021 similarly alleging that the defendants made false and/or misleading statements in violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Alan Chu filed a verified shareholder derivative action lawsuit purportedly on behalf of the Company against certain of our executive officers and the members of our board of directors alleging breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste, and violations of Section 14(a) of the Exchange Act, as well as a claim for contribution under Sections 10(b) and 21D of the Exchange Act against our Chief Executive Officer and Chief Financial Officer. In August 2021, Moshe Genack and Xingqi Liu filed verified shareholder derivative action lawsuits purportedly on behalf of the Company against certain of our executive officers and the members of our board of directors. The Genack action alleges breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste, and violations of Section 14(a) of the Exchange Act, as well as a claim for contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 against our Chief Executive Officer and Chief Financial Officer. The Liu action alleges breaches of fiduciary duties and violations of Section 14(a) of the Exchange Act.

Both this news & yesterday’s earnings have caused Peloton’s stock to dip.


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Chris L
Chris is the founder of Pelo Buddy. He purchased his Peloton in 2018, and has been riding and running ever since. You can find him on the leaderboard at #PeloBuddy.

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