Bankrupt firearms manufacturer Remington Arms agreed on Tuesday to a $73 million settlement with the families of the 2012 Sandy Hook school shooting. Because federal law typically protects gunmakers from lawsuits over criminals using their firearms to commit a crime, the case against Remington did an end run around the ban by using state consumer protection laws.
Smith & Wesson Brands (NASDAQ: SWBI) is facing a similar lawsuit in New Jersey , and now that Remington has settled, other states that were also considering weaponizing their own statutes to go after gunmakers may be emboldened to file suit as well.
The question for investors in firearms manufacturers and ammunition makers is whether the dam is about to break open and gun control activists will use this opportunity to bankrupt the industry by swamping it with steep legal costs.
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Should Smith & Wesson Investors Be Worried About Remington's $73 Million Settlement?