We are investigating possible breaches of fiduciary duty and other violations of the federal securities laws by the Board of Directors, and certain Company officers of Peloton Interactive, Inc. (NASDAQ: PTON) (“Peloton” or the “Company”), leading to a recall of more than 125,000 treadmills and pausing sales of the equipment after the machines were linked to the death of a child and dozens of other injuries.  A securities class action lawsuit is pending in the United States District Court for the Eastern District of New York.

On April 17, 2021, the U.S. Consumer Product Safety Commission (“CPSC“) warned consumers to stop using the Peloton treadmills known as the Tread and Tread+. The CPSC announced at the time that the machines had been linked to the death of a 6-year-old boy and that they had received an additional 39 reports of adults, children, pets and objects being pulled under the rear of the treadmills. The CPSC further stated that “The [CPSC] has found that the public health and safety requires this notice to warn the public quickly of the hazard….” and that “CPSC staff believes the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death. In light of multiple reports of children becoming entrapped, pinned, and pulled under the rear roller of the product, CPSC urges consumers with children at home to stop using the product immediately.” Since then, the number of incidents has been raised to at least 72, including another child that sustained a brain injury.

Despite the CPSC’s dire warnings, the following day, John Foley, Peloton’s Chief Executive Officer, dismissed the CPSC’s findings and warnings calling them “inaccurate and misleading” and said there was no reason for users to stop using the machine and that Peloton had “no intention” to stop selling or to recall the Tread+.

However, a mere two and a half weeks later, on May 5, 2021, Foley was forced to apologize for not cooperating with the CPSC sooner and agreed to voluntarily recall Peloton’s Tread+ and Tread products.  “Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+,” Foley said in a statement. “We should have engaged more productively with them from the outset. For that, I apologize.” Industry analysts are now concerned whether Peloton’s image as a high-flying fitness company that dug in its heels on a safety recall following the death of a child might be too hard to repair.

WeissLaw LLP is investigating whether Peloton’s Board of Directors: breached their duties by ignoring the recommendations of the U.S. Consumer Product Safety Commission while continuing to sell the Peloton Tread+ and Tread; failed to heed warnings of serious safety threats their products posed to children and pets; ignored internally reported incidents of injury related to the Tread+ and Tread; failed to establish and maintain a comprehensive system of internal controls over its product safety practices; and breached its fiduciary duties owed to Peloton and its shareholders.

If you own PTON shares and wish to discuss this investigation fill out the form above or contact Josh Rubin at stocks@weisslaw.co or (646) 588-3165.  There is no cost or obligation to you.

WeissLaw LLP has litigated hundreds of stockholder class and derivative actions for violations of corporate and fiduciary duties.  We have recovered over a billion dollars for defrauded clients.

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