A securities class action lawsuit was recently filed against a marketing data and analytics company following allegations that it and several of its executives violated federal securities laws.
The lawsuit against comScore Inc. was filed in the U.S. District Court for the Southern District of New York on behalf of investors who purchased shares in the firm during the class period from May 5, 2015 through March 7, 2016, according to a press release. The class action filing claims that the defendants violated the Securities Exchange Act of 1934. ComScore provides Internet data analytics for marketing purposes. This information assists its clients with understanding online consumer behavior.
comScore files Notification of Late Filing with the SEC
On Feb. 29, 2016, the company filed a Notification of Late Filing with the Securities and Exchange Commission. The document noted that the comScore would not have time to file its Form 10-K for the 2015 fiscal year. in a timely manner. Instead, the firm explained it would need additional time to get its financial statements ready and run an external audit of the information in the Form 10-K.
The company went on to disclose that its audit committee had been informed of possible issues with its accounting. The audit committee began reviewing these potential problems immediately with the help of outside counsel. ComScore proposed a March 15 date for filing the form.
After the marketing analytics firm disclosed this news, its stock dropped $1.15 per share, or 2.8 percent, on March 1.
“comScore’s accounting practices allegedly weren’t compliant with SEC regulations.”
ComScore’s audit committee could not meet the March 15 deadline
On March 7, comScore amended the Notice of Late Filing. The company explained that two days prior the audit committee had advised comScore’s board of directors that it would not complete its review before March 15. In an effort to be extra careful, the firm announced that it would be suspending its share repurchase program. In terms of stock prices, this news was also not well received. Securities fell $13.67 per share, or 33.5 percent, on March 7.
Securities class action suit claims comScore lacked adequate internal controls
As a result of the above, the class action complaint alleges that comScore made materially false and misleading statements and/or failed to disclose relevant information. The lawsuit claims that the company’s accounting practices were not compliant with applicable SEC regulations. It goes on to allege that comScore did not have the proper internal controls in place for its accounting. The class action raises the possibility that as a result of these claims, the company was not able to file its 10-K on time. As a result, the lawsuit alleges that the company’s, as well as certain officers’, statements regarding comScore’s operations, business and prospects were false and misleading and/or lacked a reasonable basis.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or email@example.com.