Robbins Arroyo LLP: Pearson plc (PSO) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Pearson plc (NYSE: PSO) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Pearson American Depositary Receipts between January 21, 2016 and January 17, 2017, for alleged violations of the Securities Exchange Act of 1934 by Pearson’s officers and directors. Pearson provides educational materials and learning technologies for teachers and students worldwide.
Pearson Accused of Making Overly Optimistic Projections
According to the complaint, in a series of filings with the U.S. Securities and Exchange Commission, Pearson predicted optimistic financial projections for the company, stating that it expected adjusted operating profit to be at or above £800 million in 2018. In order to reach this goal, the company was relying on making market share gains in North American Higher Education subjects where it was launching its “next generation” courseware. Pearson further stated that education is a sector with large growth opportunities for the company, and that due to tight cost management, the company was on track to deliver its financial guidance. However, the complaint alleges that Pearson officials made overly optimistic projections for 2017 and 2018 regarding its U.S. education business when, in reality, students were not likely to purchase Pearson’s products when more affordable alternatives were available, resulting in unsold products.
On January 18, 2017, Pearson issued a trading statement on Form 6-K for the month of January 2017 announcing that the company was not going to meet its 2018 projections. The company cited “continued challenges and uncertainty in the North American higher education courseware market.” In particular, Pearson revealed that its net revenues fell 30% during the final quarter resulting in an unprecedented 18% decline for the full year, driven in part by lower enrollment and an accelerated impact from rental in the secondary market. Further, the company shared that it was beginning 2017 with a base level of underlying profitability around £180 million lower than it had expected in early 2016. On this news, Pearson’s stock price fell by approximately 29% to close at $7.13 per share on January 18, 2017.
Pearson Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.