Another day, another controversy I don't understand
General forum
Posted on Jan. 24, 2026, 9:02 p.m. by legendofa
A couple of shareholders are suing several execs at Hasbro. The parts I understand are that the shareholders are claiming that Hasbro overprinted M:tG cards beyond consumer demand; that this is harmful to the long-term structure of the company because customers are potentially being driven off; that Hasbro is using M:tG profits to support other, unprofitable products; that Hasbro overpaid to buy back shares; and that Hasbro violated the Securities Exchange Act. What I don't understand is:
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What's illegal about this? Incompetence and bad management aren't crimes, so what's the basis of the lawsuit?
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What exactly is the Securities Exchange Act, and how would Hasbro have violated it?
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For corporate management, what's the point of holding onto product lines if they're losing so much money, instead of restructuring them or selling them off?
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Does this lawsuit have any merit?
I don't really know anything about financial law, so what exactly is going on here? Is anyone acting in good faith, or is it greedy shareholders shaking down a corrupt management team? Or is it somewhere in the middle?
Caerwyn This actually helps a lot. I wanted to check this out after hearing about it second hand, but as soon as I got below the surface level of the gaming articles, I hit a brick wall.
January 24, 2026 11:06 p.m.
FormOverFunction says... #4
Caerwyn nailed it, I think, and I would add in to it only this: I’ve learned to relish the fact that, for something like this, I’m not on the hook for anything. I can actually lean back in my chair and wait to see what comes next. Few things are better than having actual people you can go to for information that’s outside of your wheel house, so I’d want to thank Caerwyn for that again. I also, though, wanted to offer up to anyone interested the tool I’ve been using to avoid feeling like I need to get an answer out there on something; to stay relaxed while I watch things turn is sublime. Basically anyone can sue anyone else for almost anything (ignoring how far it gets into the process) so there’s usually no harm in just watching and waiting. It should be interesting at least!
January 26, 2026 10:01 a.m.
Sounds like the lawsuit was voluntarily withdrawn, and the basis for the suit was shown to be inaccurate. So it really did go absolutely nowhere.
Caerwyn says... #2
I have not read the complaint yet - none of the articles I have seen on the subject posted the actual text of the complaint, an I am not about to either go into my office to use my work PACER account or pay to access the lawsuit. I have found gaming journalists to be fairly bad at reporting facts, particularly around the law, so I am unwilling to make any firm judgments about the merits of the complaint until I actually see it and read it for myself.
That said, I am an attorney and can answer your first couple questions.
First off, a basic primer on a Del a legal issue. Typically speaking, there are two types of legal action - there are criminal actions, which are based on crimes and prosecuted by the government against an individual or entity, and civil actions, that are disputes between individuals and/or entities.
This is a civil dispute - it is shareholders suing the entity that is Hasbro and its leadership. As such, the use of the word “crime” in your question is not really relevant - what matters is whether Hasbro did something that gave rise to an individual’s right to sue.
That is where the Securities and Exchange Act comes into play. Passed a few years after the Great Depression, the Act places certain legal requirements on companies that are involved in securities trade example - most notably publicly traded companies that sell stock that is then sold on secondary exchanges. There is a lot of complexity here, but the simple version relevant here is that publicly traded companies (a) are legally obligated to try and raise their share prices and (b) cannot lie to shareholders, including when making public statements that might influence stock price.
Failure to follow these rules can lead to a civil lawsuit, where stockholders can sue because the company did something that was a mistake and devalued the stock, or if the company lied and misled investors. (There also can be criminal sanctions under the Act, like insider trading, but that’s not At issue here).
Essentially, from what I can gather online, the lawsuit is saying that Hasbro wasted money buying too much product they knew they couldn’t sell, which hurt the stock price. And that Hasbro misrepresented the strength of their assets in a way that misled investors as to potential future stock growth.
Whether they did that or not.. I would be curious to see the complaint and their arguments. I have some doubts about the strength of their claims from what I have read. - There’s a few quotes I’ve seen that made me go “it looks like your problem is you cannot read, not that Hasbro misled you - everyone else I spoke to about that at the time knew exactly what they are saying.” - The time period in question was during COVID, so there was a lot of uncertainty an Hasbro had to take some gambles that did not pay off - making a sensible guess and being wrong is not a violation, if you can prove the guess was based on evidence (I’ll also note, every judge I’ve ever been before on something where COVID caused problems was pretty deferential an understanding that it was a weird time). - I read Hasbro’s financial statements and have for quite some time. I generally found they were pretty up front about the numerous challenges their industry was facing and I didn’t think they were a great stock buy. - Some of the arguments seem based on the Bank of America evaluation of Hasbro’s stock a few years back, which, while it went viral in the Magic community, turned out to be based on faulty data and bad reporting by some BoA analysts who did not actually understand the industry. - The toy industry as a whole has suffered due to factors beyond Hasbro. The biggest purchaser, Toys-R-Us collapsed. Supply chain issues from China. Toys being a luxury that gets cut first when basic living expenses go up.
Regarding your third question, I think it is worth noting that Hasbro agrees with you. They were extended pretty far when the toy industry was doing okay, because the market supported that. With the industry as a whole shrinking, Hasbro has been actively purging brands and focusing on the items that are making profits - WotC, Furby, GI Joe, Transformers, etc. I presume the lawsuit is trying to argue they should have learned that lesson earlier - but I am not sure that is entirely fair given the level of uncertainty and external factors at play that really drove the ultimate need to cut brands. Cutting brands means getting rid of infrastructure to support the brand, which means it is hard to restart if times got better. I don’t think anyone was really thinking Covid and the after-effects would last as long as they did, so some delay in Hasbro taking its modern “cut brands” approach is not necessarily going to be negligent.
All told, I will be curious where this goes. If it goes anywhere substantial at all.
And I am sure there will be a bunch of people who take this complaint at face value without actually understanding anyone can file a complaint and say what they want; it does not mean the complaint is true or that Hasbro did anything wrong.
January 24, 2026 10 p.m.