Quantum Accused of Improperly Recognizing Revenue
According to the complaint, Quantum Corporation (NYSE: QTM) repeatedly reported positive financial results in its public filings, noting that the company was “focused on building on our momentum to drive continued growth, profitability and cash flow.” Quantum continued to deliver purported solid financial results until August 9, 2017, when the company reported results that fell short of expectations. Nonetheless, Quantum assured investors that it would take aggressive action to improve cost structure and generate consistent growth and profitability. According to the complaint, however, the company’s financial problems were much more widespread than Quantum had led investors to believe. On February 8, 2018, Quantum announced that it was postponing the release of its fiscal third quarter 2018 results and its earnings conference call, confessing that the company had received a subpoena from the U.S. Securities and Exchange Commission regarding its accounting practices and internal controls related to revenue recognition for transactions beginning April 1, 2016. On this news, Quantum’s stock fell nearly 30% to close at $3.90 per share on February 8, 2018.
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