On July 10, investors sued Mercury Systems, Inc. (“Mercury,” “MRCY,” or the “Company”) in United States District Court, District of Massachusetts. Plaintiffs in the Mercury Systems Class Action Lawsuit allege that they acquired Mercury stock at artificially inflated prices between October 24, 2017 and April 24, 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. For more information about the MRCY Lawsuit, please contact us at your earliest convenience.
Summary of the Allegations
The Company (NASDAQ: MRCY) is a “commercial provider of defense and intelligence, secure sensor and safety critical processing subsystems for defense prime contractors.”
Founded in 1981, the Company is based in Andover, Massachusetts and has offices/facilities throughout the United States. It also has a presence in Canada, Switzerland, the U.K., France, Spain and Japan. According to its website, Mercury also has more than 1,000 employees and generated more than $400 million in revenue in FY 2017.
Summary of Facts
Mercury and two of its current and former senior officers (the “Individual Defendants”) 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 certain business decisions and related issues from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Mercury stock to trade at artificially inflated prices during the time in question.
The truth came out in a press release issued by the Company on April 24, 2018. In it Mercury revealed a drastic change in t its free cash flow in the third quarter of FY 2018 compared to the same period for the prior fiscal year. It said in pertinent part: “Free cash flow, defined as cash flow from operating activities les capital expenditures, was a net outflow of $(2.6) million in the third quarter of fiscal 2018, compared to a net inflow of $11.9 million in the third quarter of fiscal 2017. The lower cash flow in the quarter was primarily a result of our continued investment in the business as we insource our manufacturing and integrate our acquisitions.”
A closer look…
As alleged in the July 10 complaint, the Company repeatedly made false and misleading public statements during the Class Period.
For example, in a press release issued at the beginning of the Class Period, Mercury said in relevant part: “We continued to deliver strong revenue growth and profitability both in our organic and acquired businesses, validating once again our ongoing strategy.”
On an ensuing conference call to discuss the Company’s financial and operating results for the first fiscal quarter ended on September 30, 2017, one of the Individual Defendants said in pertinent part: “In summary, Mercury’s on track for another great year in fiscal 2018. Our business model is working very well.”
On yet another conference call held to discuss Mercury’s financial and operating results for the second fiscal quarter and six month (period) ended December 31, 2017, one of the Individual Defendants said in pertinent part: “Even with the incremental investment in R&D, we expect to see improvement in our free cash flow for the year as we continue to grow and our CapEX is reduced versus fiscal ’17.”
Impact of the Alleged Fraud on Mercury’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 September 10, 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 Mercury 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:
|This information is provided for general information purposes only, and should not be construed as legal advice, nor does it establish an attorney-client relationship with Levi & Korsinsky LLP. Any and all information herein is simply an opinion based on publicly available information and should not necessarily be construed as fact. For more information, please visit our website at www.zlk.com.
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.