Exela Technologies Inc. (XELA) Accused of Misleading Shareholders
In Exela’s 2017 and 2018 annual reports and in its first through third quarter 2019 reports, the Company attested to its accuracy of financial reporting, the disclosure of any material changes to the Company’s internal controls over financial reporting, and the disclosure of all fraud. Despite these assurances, on March 16, 2020, Exela issued a press release revealing that it would be delaying its earnings release and earnings call due to “the delayed filing of its Form 10-K for the year-ended December 31, 2019, and the need to restate certain of its historical financial statements.” The following day, Exela further elaborated on the situation in its notice of late filing with the SEC, stating that the Company would need to restate its financial statements for 2017, 2018, and interim periods through September 30, 2019 “to correct certain historical accounting errors” as a result of a material weakness in its internal control over financial reporting. Following these disclosures, Exela’s share price fell 23% to close at $0.145 per share on March 18, 2020.