Holley (US:HLLY) TMX Newsfile·2025-12-18 13:10Core Viewpoint - Holley Inc. (NYSE: HLLY) is facing a federal securities fraud class action lawsuit, with allegations that the company misled investors regarding its financial health and relationships with resellers and distributors [2][3]. Group 1: Allegations of Misleading Statements - The lawsuit claims that Holley Inc. made false or misleading statements about its direct-to-consumer (DTC) channel, which negatively impacted its relationships with resellers and distributors, crucial for the majority of its revenue [2]. - It is alleged that Holley's discounting strategies to promote the DTC channel undermined pricing discipline, further damaging relationships with resellers and distributors [2]. - The complaint states that due to strained relationships, resellers and distributors reduced their purchases of Holley products and returned products at levels significantly above historical norms [2]. Group 2: Financial Impact and Operational Issues - Holley's DTC channel growth was insufficient to offset the negative financial impacts stemming from deteriorating relationships with resellers and distributors [2]. - The company reportedly failed to integrate and capture synergies from its acquisitions, leading to inefficient operations, excess costs, and inventory management problems [2]. - Holley is accused of misleading investors about the sustainability of its sales growth, which was temporarily boosted by COVID-related stimulus funds [2]. Group 3: Legal Proceedings - The court has determined that the complaint has sufficiently pleaded allegations of falsity and scienter, meeting the necessary criteria to survive a motion to dismiss [3]. - Current shareholders of Holley who held shares since on or shortly after July 21, 2021, can seek corporate reforms and a court-approved incentive award at no cost [4].