Kylie Cosmetics’ parent company, Coty Inc., is being sued by shareholders for allegedly purchasing the celebrity brand without doing their proper due diligence.
According to Fashion Law, a class action lawsuit was filed September 4th by shareholder Crystal Garrett-Evans which argues that the defendants engaged in “a fraudulent scheme and course of business that operated [to deceive] purchasers of Coty shares by disseminating materially false and/or misleading statements and/or concealing material adverse facts … about Coty’s business, operations, and prospects.”
They argue that Coty “overpaid” for both the P&G Specialty Beauty Business and Kylie Cosmetics acquisitions without properly assessing their valuations.
Despite Kylie Jenner’s success, this development is not totally surprising.
After being named the world’s youngest self-made billionaire in 2018 for the success of her namesake makeup brand, Kylie Jenner and her team have spent much of 2020 battling claims that they forged documents and inflated earnings reports to make Kylie Cosmetics appear more lucrative than it is.
Suspicions rose back in May when Forbes published a scathing article titled, ‘Inside Kylie Jenner’s Web Of Lies— And Why She’s No Longer A Billionaire,’ wherein the publication paints the Kar-Jenners as desperate to appear wealthier than they are, writing, “[The family] has spent years fighting Forbes for higher spots on our annual wealth and celebrity earnings lists.”
In their pursuit of said image, Forbes makes some wild accusations about Kylie and her momager, Kris Jenner— namely that the cosmetics queen has inflated her net worth, falsified income statements and tax returns, and publicly lied about the size of her business, Kylie Cosmetics, all to trick Forbes into naming Kylie the world’s youngest billionaire.
Shortly after the piece was released, Kylie Cosmetics’ CEO Christoph Honnefelder quit.
Coty also recently invested in sister Kim Kardashian’s brand, KKW Beauty, with a cool $200 million.
Kylie Jenner nor Kylie Cosmetics have publicly commented on the lawsuit at the time of publication.