The Non-Financial Ledger: What This Cost People Beyond The Balance Sheet

There is a construction worker in St. Louis who has spent their career doing physical labor. They pour foundations, they frame buildings, they move things with their bodies. Their pension fund — a trust built through decades of union dues and deferred wages, meant to pay them a dignified retirement — invested in Funko. Not because they chose to. Because the fund’s managers, doing their jobs, bought shares in a publicly traded company at what the market said was a fair price.

That price was not fair. According to the Ninth Circuit, it was inflated by misleading statements from executives who knew, or had every reason to know, that their flagship warehouse was hemorrhaging product into the desert heat while they told the world things were running fine.

Think about what a pension fund is. It is deferred wages. Every dollar in that fund is a dollar a worker chose not to take home today so they could have something to survive on after their body gives out. When those funds lose money because executives misled the market, it is those workers who absorb the hit — in smaller checks, in delayed retirement, in a quieter, harder version of the old age they were supposed to have earned.

And the people at Funko who were actually in the warehouse? The operations leads who filed reports. The workers who were pulled out of job interviews and immediately handed work on a loading dock before they were even hired. The workers asked to stack product on open racks without counting, tracking, or scanning it — and then spent their shifts chasing inventory that had vanished into a quarter-million square feet of chaos. These workers were not the executives. They were not signing SEC filings. They were just trying to do a job that the people above them had made structurally impossible.

One operations lead saw what was happening, wrote a letter to management describing the gaps, then drove back to Washington state and told the Senior Director of Fulfillment Operations directly. Nothing changed. The containers kept arriving. The racks kept filling. The parking lot filled with 300 to 500 rented shipping containers, sitting, accruing daily late fees, packed with Halloween merchandise that arrived too late for Halloween and Christmas merchandise that would not be unloaded until March of the following year.

The people who bought Funko stock during the class period — between March 3, 2022, and March 1, 2023 — did so because a company’s executives stood on earnings calls, certified federal documents, and presented a narrative of a business on the move: new warehouse, new software, high-quality inventory, momentum. That narrative was not true in the ways that mattered. And when the truth finally came out in November 2022, the stock fell 59% in a single day. Analysts said it felt like being “hit with a bomb.” Credibility, they noted, would “weigh on shares over the foreseeable future.”

The executives lost their titles. The warehouse workers lost nothing, because they had nothing to lose. The pension fund and people like Paul Haddock lost money they cannot get back without a court forcing the issue — which is exactly what is now happening.

Legal Receipts: What They Actually Said

These are verbatim quotes from the court record — statements made by Funko executives during earnings calls and in SEC filings while the warehouse disaster was actively unfolding. Each quote is drawn directly from the Ninth Circuit opinion.

“We will probably launch in the beginning early [in] the Q3 for the ERP [(meaning Oracle)], but the distribution center move will happen in the first half.” — CFO Jennifer Jung, Earnings Call, March 3, 2022

• At the time this statement was made, employees had already told Jung that the Oracle project was “not going well” and was “unlikely to be completed on time.” UK-based IT and logistics employees had warned in January or February 2022 that it was “quite clear” Oracle was “not in a good place.”
• Oracle never launched in Q3. It was delayed to 2023, then abandoned entirely in March 2023 at a cost of $32.5 million. The Ninth Circuit reversed the district court’s dismissal of the falsity claim tied to existing technology systems, meaning investors can now argue this statement was part of a misleading picture.

“[W]e did launch the new [distribution center] in April, and the ERP is set to come out at the end of the [(second)] quarter.” — CFO Jennifer Jung, Earnings Call, May 5, 2022

• By the time this statement was made, workers at Buckeye DC were already conducting 50 investigations per day to locate misplaced inventory. Storage racks were nearly full. Workers had no scanning procedures.
• Other employees considered this statement so disconnected from reality that they said it “was a weird thing to say.” Despite this, financial analysts took Jung’s statement at face value and reported it to their clients as fact — demonstrating the real-world market impact of the misleading statement.

“[W]e recently made the difficult decision to delay the remaining steps until 2023 . . . we did not want to impair the momentum that we have today by shifting to a platform that we felt wasn’t yet fully ready to support our business.” — CFO Jennifer Jung, Earnings Call, August 4, 2022

• This statement framed the Oracle delay as a strategic, confident choice — protecting “momentum.” The actual reason was that the project had no clear management, the company’s data lacked “governance,” and the system was not remotely ready.
• Funko’s own internal risk disclosures filed the same day warned that failure to operate existing information systems could “disrupt” business — yet those disclosures were written as hypothetical future risks, not as an acknowledgment of an ongoing crisis already in progress.

“[W]e believe that our inventory is generally high quality” and “generally is very healthy right now.” — CFO Jennifer Jung, Earnings Call, November 3, 2022

• This statement was made on November 3, 2022. The following day, Funko’s stock fell 59% — one of the single-day collapses that analysts described as feeling “like we were hit with a bomb.”
• By this date, the warehouse had been 50 days behind on fulfillment since August. A third-party overflow warehouse had been rented in September. Retail customers had been canceling orders for months because current-release product had become so delayed it was no longer considered “new.” One retailer needed Valentine’s Day product by October; they were told it would ship in May.
• When an investor directly asked on this same call whether Funko would need to “take any actions” on owned inventory, Jung answered: “we are constantly looking at the quality of our inventory, and we think it generally is very healthy right now.” Four months later, Funko announced a $30–$36 million inventory write-down.

Our success depends, in part, on our ability to successfully manage our inventories. We must maintain sufficient inventory levels to operate our business successfully, but we must also avoid accumulating excess inventory, which increases working capital needs and lowers gross margin. If demand or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard. — Funko Inc., Form 10-K Risk Disclosure, March 3, 2022 (also repeated in May, August, and November 2022 filings)

• This risk disclosure was written in the future tense — “we could have,” “we may need to” — framing excess inventory as a hypothetical danger that Funko was working to avoid. The Ninth Circuit held this framing was plausibly misleading because by the time these filings were made, the risks had already materialized.
• The same disclosure cited the 2019 incident — a $16.8 million write-down after 10 to 12 million units of dead inventory clogged a warehouse — as a cautionary example of what Funko was working to prevent. Both CEO Perlmutter and CFO Jung were senior executives at Funko in 2019 and lived through that incident. The court found it would be “absurd” to believe they did not recognize the identical pattern unfolding again in 2022.
• The Ninth Circuit reversed the district court’s dismissal on this specific claim, ruling that these risk disclosures “could have allayed concerns over inventory management while serious inventory problems bloomed.”

Societal Impact Mapping: Who Bears The Real Cost

This case involves economic harm, but economic harm to working people has direct health consequences. The research is unambiguous: financial loss, retirement insecurity, and wage instability are correlated with worse health outcomes, higher rates of depression and anxiety, and reduced access to care.

• Pension fund losses translate directly into reduced retirement income for union workers. For laborers in physically demanding trades like construction, retirement is not a lifestyle choice — it is a medical necessity. Losses in funds like the Construction Laborers Pension Trust of Greater St. Louis can push workers to delay retirement and continue high-injury work past the point their bodies can sustain it.
• Warehouse workers at Buckeye DC were placed in an unsafe and dysfunctional work environment from the moment the facility opened. The court record describes workers being recruited during job interviews to immediately begin unloading trucks without training, proper procedures, or operational systems. Improvised labor under chaotic conditions — heavy equipment, high shelves, no standardized operating procedures — creates direct physical risk for hourly workers.
• The conveyor belt system installed at Buckeye DC was noted to be “too tall for most employees to use.” This is a basic ergonomic failure that, in an active warehouse handling heavy product, creates strain injury risk for every worker operating around it.
• The broader pattern this case represents — where executives protect quarterly narratives at the expense of operational truth — creates systemic stress on the workers closest to the failure. Warehouse workers dealing with 120 lost-product investigations per day, partial order shipments, and constant management pressure in a broken facility absorb the psychic and physical cost of leadership’s choices.

Securities fraud of this type is a wealth transfer mechanism. It moves money from retail investors and pension funds — which hold the retirement savings of working people — to early sellers and executives who exit before the truth becomes public.

• The Construction Laborers Pension Trust of Greater St. Louis — a fund representing workers who perform some of the most physically demanding and dangerous labor in the economy — purchased Funko shares during the class period at prices the Ninth Circuit found were plausibly inflated by misleading statements. When the stock dropped 59% in a single day, those workers bore the loss.
• CEO Perlmutter and CFO Jung certified and signed the SEC filings at issue. These were not rogue junior employees. These were the two most senior executives of the company, signing federal documents, participating in investor calls, and shaping the public narrative of the company’s financial health. The executives faced demotion and job loss. The pension fund faces a potentially permanent reduction in assets.
• The stock’s collapse came after Funko’s share price had already dropped 18% on August 4, 2022 — the day of the earnings call where Jung called inventory “generally high quality.” Investors who bought during that period, trusting the public statements, bought into an artificially supported price and absorbed the full impact of both drops.
• Funko’s 2019 inventory crisis followed the same pattern: dead inventory clogged a warehouse, product sat unsold, a $16.8 million write-down hit, and the stock fell 40% in a day. That incident resulted in separate securities litigation that was settled. The same executives were present for both cycles. The workers at the bottom of both collapses were not the ones who walked away with settlements.
• Funko ultimately wrote off between $62.5 million and $68.5 million in combined inventory and abandoned software costs. Those losses were absorbed across the balance sheet, which in practical terms means shareholders — including pension funds — took the hit, while the executives who made the decisions lost only their job titles.

The “Cost of a Life” Metric: What the Numbers Actually Mean

What Now: The Case Is Alive and the Clock Is Running

The Ninth Circuit’s February 4, 2026 opinion reversed the district court’s dismissal and sent the case back for further proceedings. The shareholders’ lawsuit against Funko, CEO Andrew Perlmutter, and CFO Jennifer Jung can now proceed on the two claims the appeals court revived: the falsity of risk disclosures about inventory management and existing technology systems, and the scienter of the executives who signed those disclosures.

The Named Defendants

• Andrew Perlmutter, former CEO (demoted to President in December 2022): signed and certified the FY21 Form 10-K (March 3, 2022), the 1Q22 Form 10-Q (May 5, 2022), the 2Q22 Form 10-Q (August 4, 2022), and the 3Q22 Form 10-Q (November 3, 2022).
• Jennifer Jung, former CFO (stepped down December 2022): signed and certified all the same filings; made the earnings call statements that are at the center of the surviving claims.
• Funko Inc.: the company itself, held liable under Section 20(a) control liability now that the underlying 10(b) claim has been revived by the appeals court.

Regulatory Watchlist

• SEC (Securities and Exchange Commission): The agency responsible for enforcing the Securities Exchange Act of 1934 under which this suit was brought. The SEC has the authority to investigate false or misleading statements in Form 10-K and 10-Q filings independently of private litigation. Monitor the SEC’s enforcement actions database for any parallel investigation into Funko’s disclosures.
• DOJ (Department of Justice): Securities fraud that satisfies the criminal threshold — willful, knowing violation of securities laws — can be prosecuted by the DOJ independently. The Ninth Circuit’s finding that it would be “absurd” to believe executives did not know their statements were misleading is the kind of language that can feed a criminal referral.
• OSHA (Occupational Safety and Health Administration): The conditions described at Buckeye DC — untrained workers unloading heavy product without procedures, conveyor belts too tall for most workers to use, improvised stacking of inventory in non-standard configurations — merit scrutiny for worker safety compliance failures independent of the securities case.
• CFPB and State Pension Regulators: Pension funds like the Construction Laborers Pension Trust of Greater St. Louis operate under federal and state oversight. Any pattern of investment losses traceable to securities fraud should be reported to pension fund trustees and relevant state labor department pension divisions.

Grassroots and Mutual Aid Actions

• If you are a union member whose pension fund invests in publicly traded companies, contact your fund’s trustees and request a written explanation of how the fund monitors for securities fraud exposure in its portfolio. This is your right. Trustees have a fiduciary duty to act in your interest.
• Support the lead plaintiffs. The Construction Laborers Pension Trust of Greater St. Louis and Paul Haddock are represented by Robbins Geller Rudman and Dowd LLP and Keller Rohrback LLP. Class action securities cases require class members to come forward. If you purchased Funko Class A common stock between March 3, 2022, and March 1, 2023, contact those firms about your participation in the class.
• Share this case in labor and worker organizing spaces. The securities fraud litigation system depends on private plaintiffs — often pension funds and ordinary investors — to function as a check on corporate misconduct. Awareness of this mechanism is how it gets used.
• Document what you know. If you worked at Funko, at Buckeye DC, or in Funko’s operations or finance functions during the class period, the allegations in this case describe events that require factual witnesses. Plaintiffs’ counsel in active class litigation can be contacted directly by anyone with relevant knowledge.