Hasbro Execs Accused of Wallet Fatigue Scheme in Lawsuit

Hasbro and its top executives are facing a major federal class-action lawsuit filed by shareholders who allege the company knowingly overprinted Magic: The Gathering cards to artificially inflate short-term revenue. The 76-page complaint, filed last week in the U.S. District Court for the District of Rhode Island, accuses leadership of employing a so-called "Parachute Strategy". An emergency release of new card sets designed to plug revenue holes whenever Hasbro's other toy or entertainment divisions missed quarterly targets. The lawsuit, led by shareholders Joseph Crocono and Ultan McGlone, names Hasbro CEO Chris Cocks and former Wizards of the Coast President Cynthia Williams as defendants. 

The plaintiffs argue that their aggressive release schedule resulted in severe wallet fatigue for players and a crash in the secondary market, all while executives sold a narrative of organic growth to investors. Between the $1,000 30th Anniversary editions, a swath of licensed crossover sets, and even six discrete Dwight Schrute cards, the recent years of Magic: The Gathering have felt like Hasbro completely stopped trying to moderate its output, and now its own shareholders seem to agree.

At the heart of the complaint is the accusation that Hasbro violated its legal obligation to act in the best interests of investors by prioritizing short-term spikes over the health of the game. A significant portion of the lawsuit focuses on the disastrous release of the Magic: The Gathering 30th Anniversary Edition in late 2022. The set, which charged players $1,000 for four packs of non-tournament-legal proxies, faced immediate backlash. When sales abruptly halted, Wizards of the Coast publicly claimed the item had "sold out" and was unavailable.

However, the lawsuit disputes this official story. Citing former employees, the complaint alleges the "sold out" narrative was a fabrication designed to protect Hasbro’s stock price. In reality, the suit claims sales were paused due to negative PR and poor performance. The plaintiffs argue these misleading statements allowed Hasbro to maintain an artificially inflated stock price during a critical window, as reported by PC Gamer. 

Financial Instability and Stock Buybacks

According to the filing, Magic: The Gathering had become a critical financial pillar for the company, generating 15% of Hasbro’s total revenue and a massive 35% of its EBITDA. Shareholders claim this success was exploited to offset underperformance in other departments, leading to inventory overloads that hurt local game stores and devalued existing collections.

The suit emphasizes that these risks were not unknown to Hasbro. It cites a famous 2022 report by Bank of America analyst Jason Haas, which warned that Hasbro was "killing its golden goose" by doubling its release cadence. The report noted falling card prices and retailers cutting orders. Despite questioning from shareholders and analysts, the lawsuit alleges that the defendants repeatedly denied such speculation, insisting the increased output was a sustainable segmentation strategy to meet demand from new consumers.

The filing highlights that between April and July 2022, Hasbro repurchased approximately 1.4 million shares of its own stock for $125 million. Because the stock price was allegedly propped up by false assurances and the flooding of the market with new sets, shareholders claim the company overpaid for these buybacks by roughly $55.9 million, capital that could have been used for dividends or operations.

The lawsuit asserts that Hasbro’s strategy regarding printing Magic cards was not as carefully thought out as portrayed. The plaintiffs claim the company was, in fact, printing a volume of sets that exceeded consumer demand, claiming that inventory allocation management was problematic. Ultimately, the suit argues that by overloading the market to generate revenue and offset shortfalls, the company failed to maintain internal controls and caused substantial harm to the brand's long-term value.