Robbins Arroyo LLP: Fenix Parts, Inc. (FENX) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Fenix Parts, Inc. (“Fenix”) (NASDAQGM: FENX) in the U.S. District Court for the District of New Jersey. The complaint is brought on behalf of all purchasers of Fenix securities between May 14, 2015 and October 12, 2016, for alleged violations of the Securities Exchange Act of 1934 by Fenix’s officers and directors. Fenix engages in the auto recycling business in the United States and Canada.
Fenix Parts Accused of Misleading Investors About Its Financial Methodologies
According to the complaint, on May 13, 2015, the U.S. Securities and Exchange Commission (“SEC”) declared Fenix’s registration statement and prospectus (the “Offering Documents”) effective, and Fenix securities began trading on the Nasdaq Stock Market on May 14, 2015. The Offering Documents discussed the company’s accounting policies pertaining to inventory and the company’s assessment of goodwill impairment. Fenix subsequently submitted a series of filings with the SEC attesting to the accuracy of the financial statements and that all fraud was disclosed. However, the complaint alleges that Fenix failed to disclose that: (1) the company had an inadequate inventory valuation methodology; (2) the company had an inadequate methodology to calculate goodwill impairment; and (3) the company was engaging in conduct that would result in an SEC investigation.
On September 10, 2015, Street Sweeper published an article elaborating on Fenix’s messy financials and lack of adequate inventory valuation methodologies, stating that the company was challenged by an inability to file financial reports on time and that it had received a Nasdaq deficiency notice. On October 13, 2016, Fenix announced in a press release that the company was still not able to file its quarterly report for the second quarter of 2016 and that it received a subpoena from the SEC. Fenix attributed the delay to the complexity of accounting for the company’s multiple business combinations and additional procedures on purchase accounting and inventory. The company further noted that the SEC inquiry was focused on the company’s recent change in its independent registered public accounting firm, its previously announced business combinations and related goodwill impairment charge, the effectiveness of its internal control over financial reporting, and its inventory valuation methodology. On this news, Fenix stock declined approximately 11.6% to close at $3.42 per share on October 13, 2016.
Fenix Parts 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.
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