More details on the FTC-LifeLock case
In light of the FTC’s action against LifeLock, and the latter’s response, I thought it might be interesting to post this statement from LifeLock’s 10-Q SEC filing for the period ending March 31, 2015:
On March 13, 2014, we received a request from the FTC for documents and information related to our compliance with the FTC Order. Prior to our receipt of the FTC’s request, we met with FTC staff on January 17, 2014, at our request, to discuss issues regarding allegations that have been asserted in a whistleblower claim against us relating to our compliance with the FTC Order. On October 29, 2014, we completed our responses to the FTC’s March 13, 2014 request for information. On January 5, 2015, we completed our responses to the FTC’s subsequent requests for clarification regarding certain information that we previously submitted. We have engaged in ongoing discussions with the FTC Staff regarding the FTC’s inquiry into our compliance with the FTC Order. On February 4, 2015, we made a $20,000 settlement offer to the FTC Staff and we remain in ongoing discussions with the FTC Staff regarding a possible settlement of this inquiry. As a result of those discussions, we have accrued $20,000 as of December 31, 2014 for a possible settlement with the FTC. The ultimate resolution of the matter could result in a loss of up to $100,000.
That’s all? I had imagined that we were looking at a much bigger penalty and costs going forward. While I don’t mean to minimize the importance of $100,000 (I’d love to have it), the stock harm that has been done by the FTC action has likely cost a lot more than $100,000 to the company shareholders by now. LifeLock’s stock dropped about 50% after the announcement of FTC’s action, and so far, it is not rebounding.
The FTC litigation is not the only litigation LifeLock is defending against, as there are several potential class action lawsuits that they describe in the 10-Q filing, too, but the stock drop seems clearly linked to the FTC announcement.