NYPD union sues Amazon over pandemic losses
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The pension fund for thousands of New York City police detectives has sued Amazon in federal court, claiming the e-retail giant and its executives misled investors and hid losses spurred by the company's "excessive" expansion during the coronavirus pandemic.
- As a result, the Detectives' Endowment Association (DEA) Annuity Fund contends it purchased nearly $3 million in shares of Amazon stock "at artificially inflated prices" before the company eventually revealed $3.8 billion of losses in 2022's first quarter earnings report.
- After Amazon finally disclosed its "wrongful acts and omissions," the value of its stock plummeted, "causing significant losses and damages" to DEA and other investors, the suit states.
The other side: A spokesperson for Amazon said in an email to Axios on Monday the company wasn't commenting on the lawsuit.
Driving the news: The DEA's 26-page complaint — filed July 8 in Seattle, where Amazon is headquartered — names CEO Andy Jassy, CFO Brian Olsavsky and head of investor relations David Fildes as defendants.
- The police pension fund filed the suit as a class action on behalf of all "persons and entities that acquired Amazon common stock between July 30, 2021 and April 28, 2022."
What it says: The DEA's suit alleges that, amid the pandemic lockdowns that drove consumers to shop online, Amazon invested $6 billion in expanding its warehouse distribution and data center space.
- The company more than doubled capacity to over 387.1 million square feet by the end of 2021, according to the company's public statements cited by the lawsuit.
Yes, but: Amazon's pandemic "expansion was excessive, not supported by actual demand, unsustainable, and had created a significant economic burden and yoke around its neck, causing billions of dollars in losses," the suit claims.
- By July 2021, the suit contends that Amazon knew it had over-expanded and was forced to make massive cutbacks.
- Company officials "concealed those significant cutbacks from the public while at the same time assuring investors that the expansion plan remained on track and necessary," the suit claims.
- The $3.8 billion in losses disclosed months later were Amazon’s first quarterly losses since 2015, the suit says.
Flashback: The suit also notes that just six weeks after disclosing its first quarter losses, Amazon announced the departure of Dave Clark, the CEO of its worldwide consumer division who "spearheaded the Company's massive expansion."
Meanwhile, a coalition of labor unions also filed a complaint with the U.S. Securities Exchange Commission last week, contending Amazon misled investors by publicly sharing "cherry-picked and outdated data" about its warehouse injury rates last spring, per Geekwire.
Of note: The suit was filed a few days before Amazon Prime Day — the annual sale event exclusive to Prime members, and one of Amazon's most important sales periods — which kicks off Tuesday.