According to the complaint, E.L.F. Beauty allegedly misled investors about its financial condition between May 2023 and February 6, 2025, with the cosmetics company allegedly inflating revenue by up to $190 million while concealing weakening demand and rising inventory levels. The suit alleges executives attributed inventory buildups to strategic planning and strong consumer demand when they actually reflected slowing sales.
Peerally alleges CEO Tarang Amin, CFO Mandy Fields, and nine current and former directors violated their fiduciary duties by permitting materially false statements in SEC filings, earnings calls, and proxy statements. The complaint alleges the board failed to maintain adequate internal controls and allowed executives to portray inventory increases as evidence of growth rather than channel stuffing.
The suit points to a February 6, 2025 disclosure when E.L.F. lowered its revenue guidance and acknowledged "slower than expected new product performance" and "lower demand trends." According to the complaint, the company's stock fell nearly 20% on that news, dropping from $88.49 to $71.13 per share.
The complaint also alleges insider trading, claiming directors and officers sold more than $140 million in stock while allegedly possessing material nonpublic information about deteriorating business conditions. The suit alleges Amin alone sold $107.4 million in shares during the relevant period.
According to the filing, Peerally served a litigation demand on the board in June 2025, but the board deferred consideration citing pending securities litigation. The shareholder argues this constitutes a constructive refusal that allows the derivative suit to proceed.