Violations of federal securities laws as a result of a series of materially false statements. The Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose to investors that: (1) the Company was experiencing a decline in consumer demand; (2) the launch and shipment of the Company's new LeapTV video game system were delayed by developmental issues; (3) retailers were overstocked with the Company's LeapPad products; (4) as a result, the Company lacked a reasonable basis for its financial guidance; and (5), as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times. On January 22, 2015, after the close of trading, LeapFrog announced preliminary financial results for its 2014 fiscal third quarter, which results were significantly below the Company's stated expectations and financial guidance. According to the Company, LeapFrog's disappointing sales results were related to decreased demand for its products and development issues with the Company's LeapTV educational video game system. Following this news, shares of LeapFrog declined by nearly 35%, to close on January 23, 2015 at $2.55 per share, on unusually heavy volume. Filed in N.D. Cal.
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