Paragon 28, Inc. (NYSE: FNA) Securities Fraud Class Action

LEAD PLAINTIFF DEADLINE IS NOVEMBER 29, 2024.

If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.

Case Background:
On April 4, 2024, before the market opened, Paragon 28 announced that Defendant Stephen Deitsch, the company’s Chief Financial Officer had resigned, and that Defendant Kristina Wright had stepped in as the company’s Interim Chief Financial Officer effective April 3, 2024.  On this news, the price of Paragon 28 common stock declined $1.86 per share, or approximately 15.42%, from a close of $12.06 per share on April 3, 2024, to close at $10.20 per share on April 4, 2024.

Several months later, on July 30, 2024, after the market closed, Paragon 28 announced that it had identified errors in its financial statements for the year ended December 31, 2023, and for the quarterly periods ended March 31, 2023, June 30, 2023, September 30, 2023, and March 31, 2023.  As a result, the company indicated that those financial statements should no longer be relied upon and would need to be restated.  The company identified errors in the accounting for inventory including the calculation of its excess and obsolete inventory reserve, which resulted in an overstatement of inventory and an understatement in cost of goods sold.  On this news, the price of Paragon 28 common stock declined $1.24 per share, or approximately 13.7%, from a close of $9.03 per share on July 30, 2024, to close at $7.79 per share on July 31, 2024.

Then, on September 20, 2024, after the market closed, Paragon 28 announced the departure of Defendant Erik Mickelson, the company’s Chief Accounting Officer, while maintaining that his departure was not the result “of any issue, concern or disagreement regarding the company’s accounting or internal control over financial reporting.”  On this news, the price of Paragon 28 common stock declined $0.30 per share, or approximately 4.37%, from a close of $6.87 per share on September 20, 2024, to close at $6.57 per share on September 23, 2024.

The complaint alleges that, during the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects.  Specifically, Defendants misrepresented and/or failed to disclose that: (1) Paragon 28’s financial statements were misstated; (2) Paragon 28 understated its cost of goods sold and overstated its inventories; (3) Paragon 28 understated its required provisions for excess and obsolete inventory; (4) Paragon 28 overstated its gross profit and understated its operating loss and net loss; (5) Paragon 28 lacked adequate internal controls over financial reporting and at times understated the extent of the issues with its internal controls; (6) Paragon 28 would be required to restate its financial statements to conform with generally accepted accounting principles; and (7) as a result, Defendants’ statements about the company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

What is a Lead Plaintiff?

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case.  Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.