Robbins LLP: StoneMor Partners L.P. (STON) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that a class action complaint was filed against StoneMor Partners L.P. (NYSE: STON) in the U.S. District Court for the Eastern District of Pennsylvania. The complaint is brought on behalf of all purchasers of StoneMor securities between January 19, 2012 and October 27, 2016, for alleged violations of the Securities Exchange Act of 1934 by StoneMor’s officers and directors. StoneMor, together with its subsidiaries, owns and operates cemeteries in the United States.
StoneMor Accused of Misrepresenting Its Financial Condition
According to the complaint, StoneMor officials emphasized the company’s financial metrics based on non-Generally Accepted Accounting Principles (“GAAP”) measures to make the company appear more profitable than it actually was. Further, StoneMor’s senior management allegedly expressed contempt for GAAP in order to create an illusion of financial stability. For example, GAAP operating income for 2015 measured at only $1.3 million, while the company claimed “adjusted” operating income of a whopping $67.8 million. In addition, the complaint alleges that StoneMor has never generated sufficient cash flow from operations to make the company’s distributions. Further, StoneMor’s scheme to mislead the public about its true financial condition allegedly stemmed from the company’s Limited Partnership Agreement with its general partner, StoneMor GP, LLC, pursuant to which StoneMor GP receives additional distributions when the company issues distributions above a predetermined threshold.
On October 27, 2016, StoneMor issued a press release announcing a quarterly cash distribution of $0.33 per common unit for the third quarter of 2016—a 50% reduction over the previous quarter. The company cited its new sales force, stating that it was working to increase is quality in size. On November 9, 2016, the company released disappointing operating and financial results, revealing that it was experiencing slower than expected progress in recruitment. StoneMor further noted that it had to record additional adjustments to its consolidated financial statements and disclosed that there were material weaknesses in the company’s internal control over financial reporting as of December 31, 2015. Since the company’s distribution cut in October, its stock declined sharply by 67%, closing at $7.83 per share on December 15, 2016.
StoneMor Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.