ADTRAN, Inc. (ADTN) Accused of Misleading Shareholders
According to the class action complaint for alleged violations of the Securities Exchange Act of 1934, in February 2019, ADTRAN issued its 2018 Form 10-K, reporting total sales of $529.27 million and touting the Company’s ability to maintain sufficient inventory levels. These financial results and the Company’s ability to report excess and obsolete inventory reserves (”E&O reserves”) were then reaffirmed in a Form 10-Q in May 2019. Despite these statements, on July 17, 2019, ADTRAN revealed in its second quarter 2019 earnings report that the Company was currently conducting an ongoing assessment of its current and previous E&O reserves. On August 12, 2019, ADTRAN disclosed that it was unable to timely file its quarterly financial report with the SEC due to a material weakness in the Company’s internal control that resulted in a misstatement of its E&O reserves. Then, on October 9, 2019, ADTRAN announced that its revenue had been “significantly impacted” by a pause in shipments to a customer in Latin America. Following all these disclosures, ADTRAN’s stock price fell 44% to close at $8.81 on October 10, 2019, and has yet to recover.