FLEX Class Action Report
Levi & Korsinsky, LLP
May 18, 2018
On May 8, 2018, investors sued Flex Ltd. (“Flex” or the “Company”) in United States District Court, Northern District of California. Plaintiffs in the federal securities class action allege that they acquired Flex stock at artificially inflated prices between January 26, 2017 and April 26, 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 you need to know about the Flex class action lawsuit:
Summary of the Allegations
The Company (NASDAQ: FLEX) supposedly provides design, engineering, manufacturing and supply services and solutions “to companies of all sizes in various industries and end-markets.”
Incorporated in Singapore, Flex also has U.S. offices in San Francisco. In all, Flex says it has approximately 200,000 employees at more than 100 sites in 30 countries.
According to the May 8 complaint, the Company had more than 520 million shares outstanding as of January 24, 2018. The complaint also indicates that, on average, more than 3 million Flex shares traded on a daily basis during the Class Period.
Summary of Facts
Flex and two of its senior officers and/or directors now stand accused of deceiving investors by lying and withholding critical information about the Company’s business practices and prospects during the Class Period.
Specifically, they are accused of omitting truthful information about the efficacy of Flex’s internal controls over financial reporting and certain accounting practices from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Flex stock to trade at artificially inflated prices during the time in question.
The truth came out when the Company issued a press release on April 26, 2018. In it, Flex revealed that its Audit Committee “with the assistance of independent outside counsel, was investigating allegations by an employee that the Company improperly accounted for obligations in a customer contract and certain related reserves.”
A closer look…
As alleged in the current lawsuit, Flex repeatedly made misleading public statements throughout the Class Period.
For example, on a form filed with the SEC on January 27, 2017, the Company “confirmed there were no issues with the Company’s internal controls over financial reporting.”
Furthermore, Flex failed to disclose any accounting irregularities or weaknesses in its internal controls over financial reporting on forms filed with the SEC on four other occasions.
In reality, the Company’s internal controls over financial reporting weren’t effective, and allegations of improper accounting practices triggered an investigation.
Impact of the Alleged Fraud on Flex’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:|
The following chart illustrates the stock price during the class period:
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 July 7, 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 Flex common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
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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.
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.
For additional information about this case or our institutional services, please contact us.