American law firm Federman & Sherwood has started an investigation on behalf of investors of Signet Jewelers Ltd. on whether Signet and certain of its officers and/or directors violated sections of the Securities Exchange Act of 1934. Earlier this month, James Grant's investment newsletter issued a report raising concerns about the extent to which Signet used its credit operations to boost sales, and also referenced a previously published story on Buzzfeed about customers complaining that their diamonds had been unknowingly replaced with lesser-quality gems by Signet's Kay Jewelers stores. Two other law firms have also said they were looking into similar claims. Signet's share price has dropped 19% since the Buzzfeed report and 42% since their all-time high on October 30, 2015.
Signet has categorically denied the allegations of gem-swapping. In a statement to Rapaport News, David Bouffard, Signet’s vice-president for corporate affairs, described the lawyers’ claims as “advertising". "Signet takes all legal matters seriously,” Bouffard said. “However, we believe there is no merit to the allegations referred to in the advertising by these plaintiff’s law firms.”