REV Group (REVG) Accused of Overstating the Company’s Ability to Predict Business
According to the complaint, in the company’s registration statement, REV Group (REVG) claimed to carry a high quality backlog that enabled the company to have strong visibility into future net sales, in turn allowing it to effectively plan and predict its business. However, REV facilities were not operating efficiently or at a low cost to satisfy customer demand. On April 10, 2018, REV announced that Tom Phillips would rejoin the company as Chief Operating Officer (“COO”) and assume many of the duties of Marcus Berto, Executive Vice President, who was terminated in March 2018 due to conduct that was inconsistent with the company’s policies. Then, on June 6, 2018, REV announced that Ian Walsh had been appointed COO and would replace Tom Phillips. That same day, REV admitted that its earnings were adversely impacted by near term commodity price inflation and supply chain constraints. On this news, REV’s stock fell nearly 19% to close at $14.52 per share on June 7, 2018—34% below the company’s $22 IPO price.
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