Kay Jewelers, parent company tarnished by allegations of sexual misconduct

Last Updated Feb 28, 2017 7:19 PM EST

Signet Jewelers (SIG) shares plunged Tuesday following media reports that female employees at two subsidiaries of the company allege they were subjected to sexual misconduct and discrimination by senior workers. 

Signet owns Sterling Jewelers, which operates U.S. chains Kay Jewelers and Jared the Galleria of Jewelry. The Washington Post reported Monday that hundreds of former workers of the two chains have filed a class-action arbitration case accusing the companies of widespread misconduct. 

Sterling Jewelers disputes the Post’s account. In a statement, the company said the class-action “has never included legal claims of sexual harassment or hostile work environment discrimination” and that “the distorted and inaccurate picture of our company presented in these allegations does not represent who we are.”   

The case is expected to go to trial this fall, after a private arbitrator ruled that about 69,000 current and former employees can sue for back pay. 

As part of the case, documents that CBS MoneyWatch has reviewed show that more than 200 current and former employees of Kay and Jared’s allege discriminatory behavior at the company, ranging from verbally demeaning female workers to encouraging a culture where senior male employees freely engaged in sexual activities with female workers. 

“Male district managers were often predatory and sought out subordinate female employees to prey on,” one former employee, Alaine Dawn Gough, said in written testimony presented as part of the suit. 

Gough, who worked for Kay and Jared between 1988 and 2005, also describes conversations with female workers who said they were pressured into having sex with managers in exchange for keeping their jobs. 

A male employee also threatened to have her fired, she claims. When Gough reported the threats to her district manager, the manager “assured me that I had nothing to worry about and came over and gave me a hug, simultaneously rubbing my breasts,” according to the complaint. She was fired in 2005, according to the complaint.

Signet shares fell almost 13 percent to close at $63.59, a four-year low, and trading in the stock was briefly halted.

The Associated Press contributed to this report.