Peloton Execs Sued for Alleged Insider Trading

A Peloton shareholder is suing some of Peloton’s former and current executives claiming they engaged in insider trading, according to a Nov. 18 filing made public on Nov. 28 and first reported by Bloomberg Law.

The lawsuit, filed by shareholder Krikor Arslanian, names 12 former and current executives: Erik Blachford, Karen Boone, Jon Callaghan, Tom Cortese, Howard Draft, John Foley, Mariana Garavaglia, Jay Hoag, Hisao Kushi, William Lynch, Pamela Thomas-Graham and Jill Woodworth.

Foley co-founded the company in 2012 with Kushi. Foley resigned as executive chairman on Sept. 12, and Kushi resigned as chief legal officer in Oct. 3.  

Arslanian claims that in 2021 the named Peloton executives sold $500 million in stock before the company revealed safety issues with the Tread+ treadmill that included about 39 reports of injuries and one death of a child. The lawsuit alleges that the executives would have had knowledge of the incidents when they sold their stock.

In April 2021, the Consumer Product Safety Commission (CPSC) urged Peloton to recall its Tread+. Initially, the company refused, but on May 5, 2021, Peloton announced it would voluntarily recall both the Tread+ and Tread

The lawsuit claims that Foley sold shares worth $77 million, and eight other executives sold shares worth $417 million right before the company shared news of the safety issues with the public.  

In September 2022, Peloton announced that it could face fines from the CPSC for allegedly violating federal safety laws related to its Tread+ treadmills. The company faces several lawsuits from families related to the accidents.

The recall on the Tread+ recently was extended through November 2023 as the company works on additional safety features.