Toussaint v. Care.com, Inc. et al 1:19-cv-10628-MLW — On April 3, 2019, investors sued Care.com, Inc. (“Care.com” or the “Company”) in United States District Court for the District of Massachusetts. Plaintiffs in the CRCM class action allege that they acquired Care.com stock at artificially inflated prices between March 27, 2015 and April 1, 2019 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the CRCM lawsuit, please contact us today!
Summary of the Allegations
The Company (NYSE:CRCM) bills itself as “the world’s largest online family care platform.” As such, it says it provides a forum that allows families to “find, manage and pay for care and provide employment opportunities for caregivers.”
Founded in 2006, Care.com is now available in more than 20 countries globally. Since its inception, the Company claims, more than 13.4 million caregivers have joined its platform to seek employment, and more than 18.3 million families have joined to seek their services. The Company also claims that more than 1.6 million employees of its corporate clients have access to its services.
On its website, the Company maintains that it offers “a robust suite of safety tools and resources” to its users. The Company’s claims about its safety measures are at the crux of the April 3 complaint.
Summary of Facts
Care.com and two of its senior officers (the “Individual Defendants”) now stand accused of deceiving investors by lying and/or withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about the efficacy of Care.com’s screening measures from SEC filings. By knowingly or recklessly doing so, they allegedly caused Care.com stock to trade at artificially inflated prices during the time in question.
The truth came out in a series of events that transpired on March 8 and March 31, 2019. First, the Wall Street Journal published an article revealing that caregivers in the United States “who had police records were listed on Care.com and later were accused of committing crimes while caring for customers’ children or elderly relatives…”
Then, in an ensuing article, the Wall Street Journal reported that “hundreds of daycare centers listed as ‘state licensed’ on the Care.com website did not appear to be, and that tens of thousands of unverified daycare listings were scrubbed from the March 8, 2019 Wall Street Journal article was published.”
A closer look…
As alleged in the April 3 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For instance, in an annual report filed with the SEC at the beginning of Class Period, the Company stated in pertinent part: “We have invested in building a differentiated member experience for finding and managing care. Examples of these investments include… the proactive screening of certain member information against various databases and other sources for criminal or other inappropriate activity, and the use of technology to help identify and prevent inappropriate activity through our platform.”
As the complaint alleges, the Company reiterated the statement on forms filed with the SEC on four additional occasions. Furthermore, in each case, the Individual Defendants signed certifications in accordance with federal law. By doing so they attested that they had reviewed the material on the form, that it did not contain any “untrue statements,” and that the Company’s internal controls “are effective.”
Impact of the Alleged Fraud on Care.com’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is June 3, 2019. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Care.com common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.