On March 22, 2018 investors sued A10 Networks, Inc. (“A10” or the “Company”) in United States District Court, Northern District of California. Plaintiffs in the federal securities class action allege that they acquired A10 stock at artificially inflated prices between February 9, 2016 and January 30, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s everything to know about the A10 Networks class action lawsuit:
Summary of the Allegations
The Company (NYSE: ATEN) offers software and hardware solutions to national and international customers.
According to its website, the Company’s products allow more than 5,800 customers to protect their networks “against modern cyber threats,” heighten “application security and performance,” and enhance “scalability and availability of applications.”
A10 claims it has secured more than 100 patents and has a presence in 80 countries around the world.
Summary of Facts
A10 and four of its current and former executives now stand accused of deceiving investors by lying and withholding critical information about some of the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about revenue recognition and the efficacy of its internal controls from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused A10 stock to trade at artificially inflated prices during the time in question.
The truth started to come out on January 16, 2018, when the Company issued a press release in which it revealed that its 2017 revenue failed to meet its expectations. Two weeks later, on January 30, the Company issued another press release announcing the postponement of its 2017 Fourth Quarter and Full Year Earnings Release and Conference Call and announcing that its Audit Committee was investigating its revenue recognition practices for the fourth quarter of 2015.
A closer look…
As alleged in the March 22 complaint, the Company made misleading public statements throughout the Class Period.
For instance, in a press release issued at the beginning of the Class Period, the Company discussed its revenue for the fourth quarter of 2015, saying in pertinent part: “Revenue in the fourth quarter exceeded our guidance and we achieved our third consecutive quarter of record revenue while significantly improving our bottom line year-over-year.”
On a form filed with the SEC on May 5, 2016, the Company discussed its methods for revenue recognition, saying in pertinent part: “We recognize products revenue at the time of shipment, provided that all other revenue recognition criteria have been met. As a percentage of revenue, our products revenue vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates, and the impact of significant transactions with unique terms and conditions.”
Finally, on yet another form filed with the SEC on February 24, 2017, the Company discussed its internal controls, saying in pertinent part: “Based on the assessment, our management has concluded that its internal control over financial reporting was effective as of December 31, 2016, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.”
What the Company failed to disclose, however, was that it had “issues with its internal controls” that prompted an investigation by its Audit Committee, and that “its revenues since the fourth quarter of 2015 were false due to improper revenue recognition,” which also prompted an investigation by its Audit Committee.
Impact of the Alleged Fraud on A10’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is May 21, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in A10 common stock using court approved loss calculation methods.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
For additional information about this case or our institutional services, please contact us.