Robbins Arroyo LLP: The Geo Group, Inc. (GEO) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against The Geo Group, Inc. (NYSE: GEO) in the U.S. District Court for the Southern District of Florida. The complaint is brought on behalf of all purchasers of Geo securities between March 1, 2012 and August 17, 2016, for alleged violations of the Securities Exchange Act of 1934 by Geo’s officers and directors. Geo provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community-based and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada.
Geo Accused of Lying About The Stability of Its Government Contracts
According to the complaint, throughout the class period, Geo issued a series of filings with the U.S. Securities and Exchange Commission that detailed the company’s relationships with its government customers. Geo officials stated, “We have developed long-term relationships with our federal, state and other governmental customers, which we believe enhance our ability to win new contracts and retain existing business.” The company detailed in a subsequent filing, “We currently derive, and expect to continue to derive, a significant portion of our revenues from a limited number of governmental agencies.” Geo further noted that its governmental partners accounted for 45.5% of its consolidated revenues for the year ended December 31, 2015, and that its facilities operate in accordance with its company-wide policies and procedures and with the standards and guidelines required under the relevant management contract.
However, the complaint alleges that Geo officials failed to disclose that: (i) Geo’s facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons’ (“BOP”) facilities; (ii) Geo’s rehabilitative services for inmates were less effective than those provided by BOP; and (iii) consequently, the U.S. Department of Justice (“DOJ”) was unlikely to renew or extend its contracts with Geo. On August 18, 2016, the DOJ announced its decision to end its use of private prisons, including those operated by Geo, after officials concluded that the facilities are less safe than federal prisons. The DOJ elaborated, “…time has shown that [private prisons] compare poorly to our own Bureau facilities. They simply do not provide the same level of correctional services, programs, and resources.” On this news, Geo stock dropped $12.78 per share, or nearly 40%, to close at $19.51 per share on August 18, 2016.
Geo 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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