(CN) – A shareholder derivative suit seeks to hold Synchronoss Technologies CEO and board responsible for the software company’s 75 percent drop in value this year.
Synchronoss shares reached a high of nearly $50 in December 2016, levelling off to at $38.93 per share at the beginning of 2017. But while the S&P 500 has had a year-to-date return of 13 percent, Synchronoss shareholders have lost 75 percent of the value of their shares over the same period, with shares closing at $10.69 on Oct. 2.
Plaintiff Patricia Thieffry also claims CEO Stephen G. Waldis and members of the board failed to disclose to shareholders that an existing vendor bought Synchronoss' mobile activation business, a vendor that had been owned by Waldis and other members of the company’s senior management.
Thieffrey claims that “a $9.2 million license agreement between the company and Sequential was entered into for the lone purpose of artificially inflating the company’s financials” – a deal allegedly made possible because of close ties between Waldis and the vendor’s current owner.
Moreover, Waldis allegedly concealed that its newly-acquired business Intralinks, a virtual document sharing platform, was losing money, making Synchronoss’s guidance inflated.
Furthermore, the defendant board members made major sales of stock during this period, netting over $9.4 million, while the company repurchased shares for over $11.4 million.
“The individual defendants breached their fiduciary duties by permitting, facilitating, and causing the company to make false and misleading statements and/or omissions of material fact, by permitting, facilitating, and causing the company to fail to correct these false and misleading statements and/or omissions of material fact, and by causing Synchronoss to make the repurchases of company stock at artificially inflated prices while six of the individual defendants engaged in lucrative insider sales of company stock,” Thieffry claims.
She is represented by Laurence M. Rosen in South Orange, New Jersey.