Glavan v. Revolution Lighting Technologies, Inc., et al 1:19-cv-000980 — On January 31, 2019, investors sued Revolution Lighting Technologies, Inc. (“Revolution Lighting” or the “Company”) in United States District Court, Southern District of New York. Plaintiffs in the RVLT class action allege that they acquired Revolution Lighting stock at artificially inflated prices between March 14, 2014 and November 14, 2018 (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 about the RVLT class action, please contact us today!
Summary of the Allegations
The Company (NASDAQ: RVLT) is engaged in the provision of LED lighting for customers in “industrial, commercial and government markets in the United States, Canada, and internationally.”
Specifically, Revolution Lighting says it “designs, engineers and manufactures an extensive line of high-quality interior and exterior LED lamps and fixtures, including signage and control systems.” The Company also says that it markets and distributes its products “markets and distributes its products through a network of regional and national independent sales representatives and distributors, as well as through energy savings companies and national accounts.”
The Company is incorporated in Delaware and based in Stamford, Connecticut.
Summary of Facts
Revolution Lighting and three of its current and former officers and/or directors (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices and prospects during the Class Period.
In particular, they are accused of omitting truthful information about the recognition of revenue for certain transactions; the efficacy of its internal controls over financial reporting; and ancillary issues from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Revolution Lighting stock to trade at artificially inflated prices during the time in question.
The truth emerged in a series of events that transpired between October 17, 2018 and November 14, 2018. First, the Company released its preliminary financial results for the third quarter of 2018, which fell well short of expectations. Then, on October 19, 2018, Revolution Lighting announced “an ongoing investigation by the SEC regarding certain revenue recognition practices including bill and hold transactions that occurred between 2014 and the second quarter of 2018.” Finally, on November 14, the Company announced that its Transaction Committee was considering the CEO’s “updated proposal” to take the Company private, and cited the SEC investigation as part of his reason for wanting to do so.
A closer look…
As alleged in the January 31 complaint, Revolution Lighting and/or the Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For example, in an annual report filed with the SEC at the outset of the Class Period, the Company stated in pertinent part: “We recognize revenue for our products upon shipment or delivery to customers in accordance with respective contractual arrangements, provided no significant obligations remain and collection is probable.”
The same report included certifications signed by two of the Individual Defendants attesting that “the financial information contained therein was accurate and that it disclosed any material changes to the Company’s internal controls over financial reporting.”
Then, in a quarterly report filed with the SEC on May 12, 2014, the Company stated in relevant part: “During the second quarter of 2014, the Company implemented new accounting systems and related modifications of processes and controls at its Relume and Lumificient subsidiaries.”
Finally, in a quarterly report filed with the SEC on November 5, 2015, Revolution Lighting again referred to its revenue recognition, stating in pertinent part: “The Company recognizes revenue from fixed-price and modified fixed-price contracts for turnkey energy conservation projects using the percentage-of-completion method of accounting.”
Impact of the Alleged Fraud on Revolution Lighting’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 April 1, 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 Revolution Lighting 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.