"The 9th U.S. Circuit Court of Appeals in San Francisco said Adidas did not mislead shareholders in its annual reports by saying improper behavior by partners from the entertainment industry could have a negative spill-over effect on business. "A reasonable investor would know that a partnership with a celebrity partner like Ye would come with inherent risks relating to improper behavior," a three-judge panel said."
"Shareholders in the proposed class action said they lost money because Adidas' stock price fell after antisemitic rants led the German company to sever ties with Ye in October 2022, ending a nine-year partnership that in 2021 generated about 1.5 billion euros ($1.75 billion) of sales. The shareholders said Adidas continued the partnership despite being "fully aware" since at least 2018 that Ye routinely made improper comments to its employees and employees at his Yeezy design shop."
U.S. shareholders alleged Adidas fraudulently concealed antisemitic and other improper behavior by Ye before the partnership collapsed in 2022. The 9th U.S. Circuit Court of Appeals ruled that Adidas did not mislead investors by warning that improper behavior by entertainment partners could have negative spill-over effects. The court held that a reasonable investor would recognize inherent risks in a celebrity partnership and found no intent to defraud. Shareholders claimed losses after antisemitic rants prompted Adidas to sever ties with Ye. Adidas later sold leftover Yeezy inventory, pledged some proceeds to antisemitism causes, and reported lower Yeezy-driven sales in North America.
Read at Fast Company
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