RH (NYSE: RH) Accused of Making False Statements About the Company's Inventory Levels

According to the complaint, in order to combat slowing revenue growth, RH (NYSE: RH) decided to launch a new product line, RH Modern. RH repeatedly assured the public in shareholder reports and SEC filings that it would have the inventory to support the product launch. In reality, RH had not even finalized designs or placed orders with manufacturers in time for the launch. As a result, RH made extensive accommodations to combat customer complaints, resulting in $18 million in customer accommodation expenses. When the truth of RH's wrongdoing was revealed, the company's stock plunged, erasing more than $3 billion in shareholder value. In the meantime, RH officials pocketed over $18 million in director and executive compensation in 2015 and 2016, which was not justified by RH's actual performance. RH is also the subject of a securities fraud class action lawsuit, exposing RH to extensive damages, injuries, and losses.

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