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Stock Losses

Applied Optoelectronics Product

The class period for this class action is unusually short—less than a month. Still, the complaint alleges that Applied Optoelectronics, Inc. made false or misleading statements within this time that violated the Securities Exchange Act of 1934 and created stock losses when the truth emerged. The company neglected to disclose that a large customer was reducing its purchases from the company and that this would have a significant negative impact on the company’s performance that would offset rising results elsewhere.

Paper Titled "Stock Market" Lying on Keyboard

Sequans Communications, SA makes 4G LTE chips and is a leading provider of single-mode LTE chipset solutions for makers of wireless devices. However, the complaint for this class action alleges that the company was incorrectly recognizing revenue and making misleading statements about that and its controls over financial reporting and disclosure. For example, while the company claimed that customers had no right of return on products, it accepted a return of inventory from one customer that lowered its revenues by $720,000.

GlobalSCAPE Logo

On August 7, 2017, GlobalSCAPE, Inc. put out a press release that said its board of directors “has been conducting an investigation into certain transactions in the fourth quarter of 2016 involving improper arrangements with customers that circumvented the Company’s internal controls…” The company had overstated accounts receivable as of December 31, 2016 and license revenue for the fourth quarter of 2016, of approximately $403,000 and $396,000 respectively. According to the complaint, the company’s earlier statements, both on its figures and on the adequacy of its reporting controls, were violations of the Securities Exchange Act of 1934.

AMC Theater

AMC Entertainment Holdings, Inc. recently completed a series of acquisitions that make it the world’s largest chain of movie theaters, with theaters in the US, the UK, and Europe. The complaint for this class action alleges that AMC’s public filings contained omissions and misleading statements that violated either the 1933 Securities Act or the 1934 Exchange Act. These included omissions about the declining state of one of its acquisitions, differences in business in the European theaters it acquired, and the handling of the debt required to finance the acquisitions.

Aradigm Bulding

Aradigm develops drug delivery systems for the lungs, to improve the delivery and effectiveness of drugs and to reduce the need for injections. However, the complaint for this class action claims that the company’s statements on its new drug Linhaliq were overly optimistic, given the deficiencies of its Phase 3 clinical trials. Later, the FDA spoke of the need for better Phase 3 trials, because of the new route of delivery for the drug, the uncertainties that could not be addressed by a single Phase 3 trial, the mixed results of other inhaled drugs for the disease, and the need for longer trials for efficacy and safety tests.

Lit Screen with Keyhole Image

Since 90% of today’s personal computers use Intel processors, when Intel has a problem, it affects a very large number of people and machines. The complaint for this securities class action alleges that Intel knew about certain problems with its processors for at least six months before it informed the general public, allowing its stock price to be artificially inflated and causing a sharp drop in the price when the news finally emerged. 

Photo Taken from a GoPro Karma Drone

The complaint for this class action suggests that a great product may not be enough to make a company profitable. At issue is GoPro’s camera drone, which can produce stunning images but retails at a high price. Although GoPro’s CEO initially spoke glowingly of Karma as the second-bestselling drone in its price class, the complaint claims, just months later, the company announced it was getting rid of its remaining Karma products and abandoning the aerial market entirely.

Boeing Aircraft in Flight

TransDigm’s profitability scheme was to price-gouge the US government, claims the complaint for this class action, in the same way as some pharmaceutical companies have tried to make big gains by buying the rights to drugs for which there are few alternatives and then jacking up the price. The complaint alleges that it has increased prices unreasonably on products for which it is the sole supplier and hidden its cost structure and even its identity from Pentagon, in violation of the rules for government contracts. The concealment of this scheme from the public, the complaint says, is a violation of the Securities Exchange Act of 1934.

Forterra Water Pipes

Investors make decisions based largely on what a company’s financial information indicates about its future operating results. However, if “events and uncertainties” exist that might cause a company’s future results to be very different, its SEC filings must reveal them. The complaint for this class action claims that Forterra’s filings for its initial public offering (IPO) did not disclose these events or uncertainties, in violation of the Securities Act of 1933. They include such things as the resignation of its COO and senior management members, declining sales, downward price pressure, and weaknesses in internal controls.

Acacia Communications Logo

During the class period for this class action, Acacia was largely silent about any quality control problems it might have been experiencing, but the complaint claims that reticence itself was misleading and a violation of Sections 14(b) and 20(a) of the Securities Exchange Act of 1934. When the company finally announced that it had identified a quality problem, it claimed it had already solved it.

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