Hasbro CEO Cocks and Execs Sued for Alleged Securities Violations

[Sacrosanct]

Meaning that the suing party says "you're messing with our long term money so you can get your own short term bag, this isn't fair, and probably illegal" and wants either to be compensated for that or have a new CEO.

IME, this seems to be the current corporate culture in general. In the industry I'm in, I see it all the time. Manipulating budget reports and costs to make the immediate quarter look good but is a disaster for long term stability*. Execs don't care because they are only around 1-3 years before getting a golden parachute. So why would they care about long term growth and stability if they can get $30 million dollar bonuses each year for slash and burn, then get $50 million as a going away bonus when it all comes to light?

*For example, just with my own Fortune 500 company, 2/3 of all technology was laid off to make the 4th qtr budget look better to shareholders. Only now there isn't enough people to keep up with production defects in our applications or enhancements that are required by various regulatory changes. So we will end up missing deadlines and then get sanctioned and fined for not being in compliance. But that's a "4th qtr 2026 problem".

It's maddening.

 

[aiouh]

This one really, really confuses me. What specifically is Hasbro's concern with the secondary market for Magic cards?

Would you, as a consumer, buy a new set at 100$ if the last one was firesold off at 50$ due to overprinting?
Would you, as a distributor, order a bigger allocation of new cards if the last shipment sold poorly?
Where do consumers go when local game stores go under on unsold inventory?

Even if they don't make money off of secondary sales, it affects their pricing power and future revenue.

 

[trappedslider]

Would Hasbro say they've entered into a social contract regarding the secondary market value of their cards? Like, that sounds very much like a collector's justification for why Hasbro is to blame for prices in the secondary market, but that doesn't make it true.

WotC and by extension Hasbro would not.

If they can prove that Cocks knowingly tanked Collectibility or acted irresponsibly (discovery and internal documents) they could hold him responsible and go past the Business Judgment Rule.

Is the "cocks" intentional or is autocroeect doing something?

This one really, really confuses me. What specifically is Hasbro's concern with the secondary market for Magic cards?


I could see it being a problem if Hasbro is obfuscating where their money is being made. Imagine if you were to invest in Hasbro thinking they had various viable lines of business only to find they've got the one. Suddenly your investment is a lot riskier than you thought. I'm certainly not arguing this is the case with Hasbro, I don't know, but it makes more sense than complaining about the secondary market.

The fact that for years, Hasbro has been trumpeting that MTG makes WotC money and not making noise that D&D makes them money should tell you which revenue stream gets the attention from the board room.

I'll point out that the most recent uproar in the player base due to "value" of cards, was a couple of years when one format banned three cards. One or two of those cards lost a large chunk of value for people's collections and lead to death threats.

 

[Scribe]

I've hated what they did to Magic since F.I.R.E, and I hope they go down over it.

 

[Morrus]

Is the "cocks" intentional or is autocroeect doing something?

It’s the man’s name.

 

[Cergorach]

I know very little about Hasbro and MtG overall, so this may be either basic knowledge but does Hasbro actively participate in this secondary market? Overprinting product can be damaging to the company if it cannot sell that inventory (see TSR circa 1990s), but the damage to the secondary market is not necessarily Hasbro’s concern, or is it?

To me this is kind of like complaining that comic book companies in the 90s made too many foil cover comic books. Well, okay, but why did you think buying a bunch of foil cover comic books constituted a suitable investment?

While certain folks might complain about the secondary market because they are heavily 'invested' in there, I can see the perspective from pure Hasbro investors. But what I read in the short version, it doesn't sound like pure investors, more like folks heavily invested folks in MtG that have some shares in Hasbro, that are now raising a fuss. This has happened before, this will happen again. Note: Some folks have millions if not tens of millions of MtG product, this can be individual cards or unopened boxes.

From a pure investor perspective, when you sour the secondary market, certain people that buy heavy into MtG with the intention of not opening what they buy, won't buy (as heavily) anymore. So you have some short term gains while destroying future sales significantly. Add into that that due to those short term gains the Hasbro stock prices increased drastically and Hasbro then bought a bunch of their own stock back at 70% over normal prices, you need to look strongly at which investors sold stock in that period...

CEOs and Execs don't stay in those positions forever, so when they only look how to milk the most from their company during that period, that's a BIG problem, especially when you're damaging the company in the long term and are getting a lot out of it (think bonuses due to high stock prices or profit from selling stock).

 

[TiQuinn]

Publicly, no. But if you sell limited run collector's items at increased prices compared to normal print runs and then brag about it for years on your quarterly reports about how this is a great way to make lots of money, it stands to reason that your MtG operations are highly dependent on collectability, and secondary market prices serve as a proxy.

If they can prove that Cocks knowingly tanked Collectibility or acted irresponsibly (discovery and internal documents) they could hold him responsible and go past the Business Judgment Rule.


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But do they refer to their product as collector's items? Do they profit from the increase or decrease of that perceived secondary value? That's part of this. Yes, the elephant in the room is that there is a secondary market where these things are sold for a lot of money. Yes, Hasbro is aware that's happening. But what you're describing is a speculative market, and it doesn't sound to me like Hasbro makes money directly from that market.

 

[TiQuinn]

From a pure investor perspective, when you sour the secondary market, certain people that buy heavy into MtG with the intention of not opening what they buy, won't buy (as heavily) anymore. So you have some short term gains while destroying future sales significantly. Add into that that due to those short term gains the Hasbro stock prices increased drastically and Hasbro then bought a bunch of their own stock back at 70% over normal prices, you need to look strongly at which investors sold stock in that period...

There's certainly impact from people buying more of those cards, and it can absolutely be a bad idea to use short term interest that's driven from speculation as the basis for making more and more cards. I'm not saying they didn't do something dumb, but it's a far cry from something that is provable in court. It also seems like it's based on one report from a couple of years ago. B of A is not the only bank to put out investment reports - these things are a dime a dozen, but they still amount to educated guesses and opinions. I have a hard time believing that a single report is going to get someone far as the basis for a lawsuit.

 

[Cergorach]

I'm not saying they didn't do something dumb, but it's a far cry from something that is provable in court.

I suspect that they are not saying that they acting 'dumb', but that they are acting maliciously to line their own pockets, and that's a lot easier to prove with bonuses and stock sales (as those are tracked). And you don't have to be a rocket scientist or a diviner to know that certain actions have negative consequences. As we've already seen a couple of times what sales numbers did after overprinting sets and what that did longer term, we also saw what happened when they didn't overprint. This is also not a criminal proceeding, it's a civil case where the requirements are a lot lower. Why do you think everyone and their granny are suing everyone else in the US?

 

[TiQuinn]

I suspect that they are not saying that they acting 'dumb', but that they are acting maliciously to line their own pockets, and that's a lot easier to prove with bonuses and stock sales (as those are tracked). And you don't have to be a rocket scientist or a diviner to know that certain actions have negative consequences. As we've already seen a couple of times what sales numbers did after overprinting sets and what that did longer term, we also saw what happened when they didn't overprint. This is also not a criminal proceeding, it's a civil case where the requirements are a lot lower. Why do you think everyone and their granny are suing everyone else in the US?

I think that's a lot of tilting at windmills unless the folks doing the suing are people with deep pockets like a Carl Icahn-type individual to be able to prove that executive bonuses and stock sales are evidence of wrongdoing.