The RealReal, Inc.

The RealReal Inc. (“TRR”) promotes itself as the world’s largest online marketplace for authenticated, consigned luxury goods. On June 27, 2019, TRR held its Initial Public Offering (“IPO”), wherein the IPO related documents maintained that TRR’s luxury items were, inter alia, put through a “rigorous, multi-point, brand-specific authentication process” conducted by “highly trained” authentication staff. Other public representations by TRR similarly touted TRR’s rigorous authentication processes by highly trained experts. However, the action alleged that the TRR’s authentication process was nowhere near as robust as professed, and most items purportedly “authenticated” by TRR were merely reviewed by TRR’s copywriters, who had minimal training or experience in authentication. The action further alleged that between June 27, 2019, and November 20, 2019, officers and directors of TRR breached their fiduciary duties by making and/or causing TRR to make a series of materially false and misleading statements and omissions regarding TRR’s authentication processes, risk exposure and purported growth and success, and by failing to maintain internal controls.

Hynes & Hernandez, LLC was an integral part of the litigation team that negotiated a settlement that improves TRR’s internal controls regarding its authentication practices –the core of the TRR’s business– and directly addresses the deficiencies that resulted in the alleged wrongdoing.

The settlement reforms included:

• Improvements to TRR’s authentication practices: requires having the Chief Operating Officer (“COO”) be responsible for the oversight of the training of the authentication staff by incorporating semi-annual assessments of all authentication staff and certifications into TRR’s existing training programs; to ensure that all individuals hired comply with the authentication practices and are skilled regardless of their hire date, a special assessment shall be held for such individual within thirty (30) business days of his or her hiring after which a certification shall be provided; and requires training shall be in person where practicable and determined to be most effective.

• A new written policy that establishes Board oversight of TRR’s retail sales practices and relationship with retain customers: requires that the CCO or its designee shall report to the Board no less than semi-annually regarding oversight for retail sales practices and other elements of TRR’s relationship with retail customers; requires that the report, at a minimum, shall include any significant and/or potentially material issues with respect to retail sales practices and TRR’s relationship with retail customers; and mandates that the Board will monitor any remedial actions taken with respect to any material issues and get updates as needed.

• The creation of a new management-level risk and compliance committee: the committee shall be responsible for (1) determining, implementing, and assessing TRR’s risk management policies and the operation of TRR’s risk management framework; and (2) identifying material risks relating to TRR’s compliance with all applicable laws and regulations; requirements for the committee process include, among other things, reporting to the Audit Committee any compliance issues that may have significant financial implications or are sufficiently material to trigger a disclosure obligation, free and open access to TRR management and employees to fulfill its responsibilities, and meeting on a quarterly basis.

• Improvements to TRR’s Disclosure Committee Charter: the Disclosure Committee Charter shall be amended to require that (1) the Disclosure Committee will report to the Board and Audit Committee; and (2) the Disclosure Committee shall include TRR’s authentication process in its disclosure control considerations and in connection therewith the evaluation of customer or whistleblower complaints shall be considered in the assessment and validation of such disclosure.

• Improvements to TRR’s Whistleblower policy and procedures: includes amendments to the policy and processes to specify that the whistleblower communication channel may be used to “report concerns relating to business practices, ethical business or personal conduct, integrity, and professionalism” and provides a specific process for complaints regarding officers and directors.