A securities class action lawsuit was recently filed against a waste management company following claims the company breached federal securities laws.
The suit was brought against Stericycle, Inc., an Illinois-based firm that specializes in disposing of medical waste and similar substances or items, based on allegations that the company withheld critical information about its financial health around the time of a large public offering. On Sept. 9, 2015, it sold some 7 million shares at a price point of $100 each, but only about a month and a half later, when it announced its third-quarter and year-to-date financial details, the company revealed it fell well short of investors’ expectations based on that stock price.
More details of the situation
During an investor call related to the third-quarter filing, executives further disclosed that not only had it under-performed based on its stock price from six weeks earlier, but it also anticipated a slowdown that would continue into the fourth quarter of last year before smoothing out this year. As a result, the company’s stock slipped more than 12 percent.
Consequently, the suit alleges that the company knew of, but did not disclose these shortcomings in terms of growth rates and future expectations. Once that disclosure was revealed, the company saw even more of a negative effect, which subsequently did more damage to investors. The class period of this case is Feb. 7, 2013 through Apr. 28, 2016, and investors have until Sept. 12, 2016 to file a motion to join the class action.
Ups and downs
When Stericycle advanced the public offering last September, its stock price was at $136.29, and rose to as much as $149.48 on October 16, according to Google Finance. Immediately after the announcement of the disappointing results, the stock’s value plummeted to $120.31, and bottomed out a few months later at $105.99 in early February.
Today, its stock price stands at about $106, after rebounding to more than $128 in early April, the report said.
Stericycle has also been embroiled in a number of other lawsuits in the past year or so, with the company paying $26.75 million to settle a fraud suit last October, according to a report from the Chicago Tribune. That suit was brought by a number of government institutions in 12 states nationwide – including school districts, police departments, and municipalities – alleging years of bogus price increases.
A similar class action suit is now forthcoming on behalf of many types of business in the medical care industry, according to a separate report. The class members in this case include veterinarian practices, medical clinics, dental practices, and medical labs. It alleges the company sometimes automatically raised rates by as much as 18 percent, sometimes as often as every six months, despite what was in the clients’ contracts.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or firstname.lastname@example.org.