(CN) - Shareholders are suing Ubiquiti Networks Inc. for allegedly misrepresenting the company's financial condition, causing Ubiquiti stock to trade at artificially inflated prices.
Ubiquiti is a New York-based technology company that describes itself as a developer of technology platforms for hi-capacity distributed Internet access. The company primarily deals in network router hardware, but recently entered the consumer electronics market.
The securities class action was filed in the Southern District of New York on behalf of buyers of Ubiquiti stock between Aug. 3, 2017 and Feb. 20, 2018, naming CEO Robert J. Petra and CFO Kevin Radigan as defendants.
The lawsuit alleges Petra and Radigan caused the company to inaccurately report its operating metrics through the use of improper accounting practices. In addition, the defendants allegedly made false statements about the size and level of engagement of its online community.
The company's financial growth prospects, meanwhile, were allegedly inflated and based on accounts receivable amounts, cash and margin metrics and inventory that had become obsolete.
These "misrepresentations and omissions" were subsequently made and repeated in SEC statements, an investor conference call, earnings calls and press releases, the suit says.
On February 20, Ubiquiti disclosed that the SEC had issued subpoenas requesting information and documents regarding accounting, auditors, international trade practices, distributor and third-party relationships.
The news caused Ubiquiti shares to plummet $18.76 per share to close at $55.28 per share that day.
The class is represented by Samuel H. Rudman and Mary K. Blasy of Robbins Heller Rudman & Dowd LLP in Melville, N.Y., and Corey D. Holzer in Atlanta, Ga.
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