Aceto Corporation (ACET) Accused of Overstating Its Financial Guidance

According to the filed complaint against the company's officers and directors for breaches of their fiduciary duties between August 25, 2017 and April 18, 2018, Aceto Corporation (ACET) assured investors that the company's internal control over financial reporting was effective. In reality, Aceto lacked proper internal control to identify the misapplication of cash. Aceto began to reveal its troubles on November 3, 2017, when it disclosed that the company's system of internal control failed to generate a report to assure that the aging of trade receivables was accurate. The company's problems became more apparent on February 2, 2018, when it revealed a net loss of $13.86 million, compared to a net loss of $560,000 in the previous year's comparable quarter. On April 18, 2018, Aceto finally announced that its 2018 fiscal year earnings guidance should no longer be relied upon and that it anticipates recording non-cash intangible asset impairment charges in the range of $230 million to $260 million. On this news, Aceto's stock plummeted over 64% to close at $2.66 per share on April 19, 2018, and continues to fall.

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