Peloton executives (most of them former executives at this point) are facing an alleged insider trading lawsuit from an investor regarding the selling of stock around the time of the Tread+ recall in 2021.
Krikor Arslanian, the investor central to the complaint, is claiming that both current and former Peloton executives sold $500 million in stock while concealing safety issues with the Tread+. The suit specifically names 12 individuals: Erik Blachford, Karen Boone, Jon Callaghan, Jay Hoag, William Lynch, Pamela Thomas-Graham, Howard Draft, John Foley, Tom Cortese, Jill Woodworth, Hisao Kushi, and Mariana Garavaglia.
The suit alleges that these top Peloton executives were aware of safety issues with the Tread+, but rushed to sell off stock rather than maintaining their fiduciary responsibility to Peloton and its shareholders. The suit details the timeline of Peloton’s communications in the spring of 2021, including their repeated assurances that the device was safe and they did not plan to issue a recall.
Bloomberg Law was the first to report this news, and Peloton did not respond to their request for comment at the time of publishing. According to Bloomberg:
The suit, originally filed under seal Nov. 18, echoes probes by the Justice Department and securities regulators, proposed securities class actions, and personal injury litigation facing the company in federal court. An earlier investor lawsuit seeks internal files to investigate similar concerns.
We’ve previously shared details regarding these additional inquiries, and you can read more via our site.
The Tread+ has not been available for sale since 2021 and just last month the Consumer Product Safety Commission (CPSC) recall was extended another year through November 2023. According to Peloton’s most recent comments about the CPSC recall, it appears they are working on a physical rear guard for the device in addition to other potential new safety features.
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