Casa Systems, Inc. (CASA) Accused of Misleading Investors in IPO
According to the complaint for alleged violations of the Securities Act of 1933 pursuant to its December 2017 initial public offering (“IPO”), Casa Systems, Inc. (CASA) held its IPO on December 15, 2017 offering 6,000,000 common shares at $13 per share. Its registration documents stated that new technology initiatives would allow for a compelling market opportunity and touted the fact that these initiatives would prompt Casa Systems to experience continued rapid growth. However, these documents were false and misleading as Casa Systems failed to disclose material information about the state of its customers’ spending. In reality, Casa Systems knew its key customers’ spending had entered a “digestion” period that mitigated their expenditures. On August 14, 2018, Casa Systems announced disappointing financial results and cut its revenue guidance for the year by $50 million. On this news, Casa Systems stock declined from $15.60 to $12.08, a drop of almost 23%. Since then, Casa System has continued to have disappointing financial results and the stock trades at just $6.59, a decline of 49% from its IPO price.