On April 4, 2018, investors sued Synacor, Inc. (“Synacor” or the “Company”) in United States District Court, Southern District of New York. Plaintiffs in the federal securities class action allege that they acquired Synacor stock at artificially inflated prices between May 4, 2016, and March 15, 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 Synacor class action lawsuit:
Summary of the Allegations
Formerly known as CKMP, Synacor (NASDAQ; SYNC) has been in business since 1998.
Based in Buffalo, N.Y., It bills itself as “the trusted technology development, multiplatform services and revenue partner for video, internet and communications providers, device manufacturers, and enterprises.” As such, the Company says it helps broaden its partners’ reach by providing “modern, multiscreen experiences and advertising to their consumers that require scale, actionable data and sophisticated implementation.”
The company’s representation of a three-year contract to host web and mobile services for AT&T, Inc., secured in 2016 is the crux of the April 4 complaint.
Summary of Facts
Synacor and two of its senior officers and/or directors are now accused of deceiving investors by lying about and withholding critical information about the Company’s business practices, operational and compliance policies during the Class Period.
Specifically, they are accused of omitting truthful information about receipt of revenues from the AT&T contract from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Synacor stock to trade at artificially inflated prices during the time in question.
The truth first surfaced when the Company issued a press release after the market closed on August 9, 2017. In it, the Company announced that “a significant portion” of the revenue from the AT&T contract expected in the third and fourth quarters of 2017 would be delayed until 2018. The Company also said that it was adjusting its financial guidance for 2017 accordingly.
Then, in a conference call held after the market closed on March 15, 2018, the Company’s CEO, who is also an individual defendant in the April 4 complaint, discussed the “shortcomings of the AT&T contract” and adverse impacts on Synacor’s financial guidance.
A closer look…
As alleged in the April 4 complaint, the Company repeatedly made misleading public statements during the Class Period.
For example, in a press release attached to a form filed with the SEC on May 4, 2016, the Company announced its partnership with AT&T. In this context, Synacor said in pertinent part: “Expected revenues from the contract are $100M per year, after full product deployment in 2017.”
Then in a press release issued on May 10, 2016, the company described its recent accomplishments, saying in pertinent part: “Signed a multi-year portal service agreement with AT&T, which is expected to reach approximately $100 million of annual revenues after full product deployment is achieved in 2017.”
In another press release issued on March 15, 2017, Synacor again noted its recent achievements, saying in pertinent part: “Made excellent progress on the plan to launch the new AT&T desktop and mobile web portal in the first half of 2017, and deployment will be completed through 2017.”
In the same press release, the Company discussed its guidance, saying in pertinent part: “Revenue for the full year of 2017 is projected to grow 26% to 33% to be in the range of $160.0 million to $170.0 million.”
Impact of the Alleged Fraud on Synacor’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 June 4, 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 Synacor 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.
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