Gaia, Inc. (GAIA) Overstated its Subscriber Count and Lacked Adequate Internal Controls
A shareholder filed a class action on behalf of all investors who purchased Gaia, Inc. (NASDAQ: GAIA) securities between December 27, 2017 and November 7, 2022, for violations of the Securities Exchange Act of 1934. Gaia purports to be a “global conscious media and community company that operates a global digital video subscription service that caters to a unique and underserved subscriber base.”
According to the complaint, defendants failed to disclose that: (1) the Company’s Q1 2019 subscriber count was overstated; (2) the Company lacked adequate internal controls; and (3) as a result, defendants had a heightened risk of regulatory scrutiny and were ultimately subject to an SEC investigation and action.
On November 7, 2022, the Company revealed a SEC proceeding that began in 2020 relating to the Company overstating its subscriber count, which reached a settlement in September 2022. Specifically, the Company disclosed it “reached an agreement in principle that contemplates that Gaia would consent, without admitting or denying any findings, to the entry of an administrative order: (1) finding that Gaia (a) misstated in its April 29, 2019 earnings release and earnings call the number of paying subscribers for the period ending March 31, 2019, a quarter during which Gaia extended a free month of service to certain subscribers in the midst of a transition to a new enterprise-wide data system and (b) failed to comply with SEC whistleblower protection requirements with respect to the termination of one employee and the language used in severance agreements for other employees; and (2) requiring Gaia to pay a total civil monetary penalty of $2,000[,000] over a one-year period for these violations.”
What Now: Similarly situated shareholders may be eligible to participate in the class action against Gaia, Inc. Shareholders who want to act as lead plaintiff for the class must file their papers by February 21, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.