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Securities class action suit filed against FireEye, Inc.

 

A securities class action suit was recently filed against FireEye, Inc.

Company basics
Publicly traded and headquartered in Milpitas, California, FireEye is a network security firm. The company specifically offers automated threat forensics and dynamic malware protection from sophisticated dangers to cyber security, including spear phishing and advanced persistent threats.

On Jan. 6, 2015, Glancy Binkow & Goldberg LLP announced it had brought forth a shareholder lawsuit representing individuals and organizations that bought company securities between Jan. 2, 2014, and Nov. 4, 2014. These dates are inclusive, and represent the class period.

Securities class action allegations
The securities class action suit, filed in the United States District Court for the Northern District of California, involved allegations that the defendants failed to disclose key matters to investors, and also provided them with statements that were false and or misleading.

A handful of other shareholder lawsuits were filed, making similar claims. The Law Offices of Vincent Wong announced a legal claim on Jan. 5, 2014, which represented purchasers of the company’s securities during the aforementioned class period between Jan. 2, 2014, and Nov. 4, 2014.

This suit specifically alleged that the company failed to reveal key information, and also made false and or misleading statements, pertaining to the company’s operations, business and prospects. A separate securities class action suit – brought forth by Bronstein, Gewirtz & Grossman, LLC and announced on Dec. 26, 2014 – mentioned the exact same claims.

The Glancy Binkow lawsuit provided more specific claims, indicating that the defendants failed to communicate several important matters. First of all, they allegedly did not reveal that the company had altered its business strategy, shifting to providing end-to-end services after previously providing software.

This move altered the firm’s cost structure, as providing software came with high fixed costs, but scaling the subscriber base did not cause marginal costs – which were insignificant – to increase.

According to the suit, FireEye also failed to reveal that to cope with violations of network security, the new strategy would entail hiring a growing number of highly-trained employees. Finally, the legal claim asserts that due to the following, a growing customer base would force the organization’s expenses to grow incrementally, which could pose a threat to the company’s ability to generate profits in the future.

Financial results
On May 6, 2014, FireEye released financial results for its first fiscal quarter, indicating that it generated $24.3 million in product revenue. This figure came in below analyst predictions of $31 million, and illustrated the company’s transition toward focusing on services, the Glancy Binkow lawsuit alleged. That day, company shares declined $8.48 each to close at $28.65.

On Nov. 4, 2014, the company issued figures that once again lagged the expectations of analysts, the law firm claimed. In addition, the network security firm revealed that it had essentially stopped using its original software-based approach. This move coincided with a loss for the period of $0.51 per share.

According to the lawsuit brought forth by The Law Offices of Vincent Wong, FireEye’s shares fell from a closing price of $40.23 to $32.16 on Nov. 25, 2014.

Investor guidance
In addition to filing the aforementioned securities class action suits, the law firms that brought forth these legal actions provided shareholders with pertinent information. Glancy Binkow encouraged eligible investors – who have lost $100,000 or more – to reach out to Casey Sadler. The law firm also revealed that those interested in serving as lead plaintiff have until Jan. 26, 2015, to move the court. Alternatively, eligible investors have the option to do nothing and remain an absent member of the class, or retain legal representation of their choice.

The Law Offices of Vincent Wong told investors that if they wish to learn more about the suit, they can contact Vincent Wong. In addition, shareholders who are eligible to serve as lead plaintiff have until Jan. 26, 2015, to request that the court appoint them to that position.

Bronstein, Gewirtz & Grossman informed shareholders that no class has yet been certified in the lawsuit it previously filed, and those who have an interest in learning more can reach out to either Peretz Bronstein or his Investor Relations coordinator Eitan Kimelman. Finally, the law firm revealed that while investors do not need to serve as lead plaintiff to share in any recovery generated, they can move the court to serve as lead plaintiff up until Jan. 26, 2015.

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