Skechers execs accused of billion-dollar fraud — with assist from private equity

Investors accuse Skechers executives of manipulating financial projections to facilitate a discounted buyout by a private equity firm, 3G Capital.LOS ANGELES (CN) — A proposed class of shareholders sued the popular shoe brand Skechers, claiming the company collaborated with a private equity firm and a financial adviser to artificially drive down stock value ahead of last year’s shareholder buyout.The plaintiff, SM Merger/Arbitrage L.P., a private investment fund, accuses Skechers leaders of orchestrating a multibillion-dollar fraud scheme with private equity giant 3G Capital, which purchased the company last year, and financial adviser Greenhill & Co., which aided in the negotiations.The proposed class action, filed Wednesday in the Central District of California, stems from Skechers’ September 2025 sale to 3G Capital, which took the publicly traded shoe company private. The private equity firm bought the company for $9.4 billion.The plaintiff says the defendants disseminated false and misleading statements, omitted facts and manipulated financial projections to deflate the company’s stock price and facilitate a more lucrative deal.“The officer defendants’ core objective in negotiating the take-private with 3G Capital was to buy out unaffiliated minority shareholders at an artificially depressed buyout price of $63 per share of Skechers Class A common stock, while reaping enormous profits for themselves and their family members, and maintaining their senior positions with the company following the take-private,” they write in the complaint.They accuse members of the Greenberg family, Skechers’ founders, of maintaining their stake and control of the company while manipulated financial projections tanked the company’s stock, allowing shareholders to be bought out at a lower price.“In contrast, the Greenbergs took advantage of the alternate consideration option offered to legacy shareholders under the take-private, through which they received $57 per share in cash plus one equity unit per share in the post-closing private entity, with an expected per unit capital contribution amount of $29, a nominal total of $86 per share,” the plaintiff says. “This allowed the Greenbergs to receive over $1 billion in cash proceeds from 3G Capital while maintaining their economic interest in the business by rolling over more than 18 million shares into the private units of the new Skechers Limited Liability Company.”The investors also take aim at the shoe brand’s new owners for their part in the scheme.“3G Capital was willing and able to provide this windfall to the Greenbergs in exchange for their agreement to take-private terms that provided unfairly low consideration to Skechers’ public shareholders,” the plaintiff says. “The scheme would only work if investors were deceived into believing that they were receiving fair value for their shares, either when exchanged in the Take-Private at the agreed price, or in open-market sales prior to the take-private.”Before announcing plans for the deal, the investment fund says Skechers used the threat of a trade war between the U.S. and China to further deflate the price, even though the shoe brand internally viewed the potential impacts of tariffs as minimal, or even beneficial.Financial management firm Greenhill & Co. was also complicit in this fraudulent scheme, according to the investment fund. Greenhill knowingly used the lower projections proffered by Skechers in its fairness evaluation of the deal, the shareholders say.The proposed class period is April 24, 2025, until the acquisition on Sept. 12 that year.“Defendants’ material misstatements and omissions, together with other aspects of their fraudulent scheme, deprived unaffiliated shareholders of the ability to make an informed decision about the actual value of their Skechers Class A common stock,” the plaintiff says. “Defendants’ wrongful acts and omissions caused plaintiff and the class to suffer damages through the sale of their Skechers’ shares at artificially deflated prices during the class period.”Skechers, founded in the 1990s by Robert and Michael Greenberg, was a publicly traded company for almost three decades. The Fortune 500 company is one of the largest footwear brands in the world.A spokesperson for Skechers declined to comment on the litigation.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads