Robbins Arroyo LLP: SuperCom Ltd. (SPCB) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed in the U.S. District Court for the Southern District of New York. The complaint alleges that officers and directors of SuperCom Ltd. (NASDAQCM: SPCB) violated the Securities Exchange Act of 1934 between June 1, 2015 and November 27, 2015, by making materially false and misleading statements about SuperCom’s business prospects. SuperCom provides traditional and digital identity solutions to governments, and private and public organizations worldwide.
SuperCom Accused of Artificially Inflating the Price of its Securities
According to the complaint, in 2013, SuperCom attempted to attract more international investment to requalify for a new listing on the NASDAQ Capital Market after being delisted for failing to comply with listing requirements in 2009. As a part of this effort, Arie Trabelsi, SuperCom’s Chief Executive Officer, stated, “Our aim is to better realize the true value of our company by increasing our transparency and communication levels with our existing shareholders and new investors.” Unfortunately for investors, SuperCom fell short of its goal. Instead, it allegedly implemented a scheme to raise capital from the U.S. capital markets at fraud-inflated prices. To further its scheme, the company reported its first quarter 2015 results, claiming it had continued to advance its long-term growth strategy and was increasingly excited about its pipeline of opportunities. As intended, the price of SuperCom shares surged on these statements, closing up approximately 12% at $12.09 per share on June 1, 2015.
Things took a negative turn when the company received a letter from the U.S. Securities and Exchange Commission on September 30, 2015, challenging certain errors in its 2014 annual financial report. SuperCom finally disclosed its preliminary third quarter 2015 results for the period ended September 30, 2015 on November 30, 2015, two months after the end of that quarter, acknowledging that it significantly missed its own revenue target. It disclosed that it only expected third quarter revenues to come in at $5.5-6.1 million, less than half of the $13.38 million the company had led the investment community to expect. It further disclosed that it was unable to recognize more than $10 million of revenues that were expected this year due to delays associated with foreign government customers, and admitted it would not see the $10 million until 2016, if ever. On this news, SuperCom stock plummeted by more than $3 per share, or 40%, to close at $4.60 per share on November 30, 2015.
SuperCom 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.