Labul v. XPO Logistics, Inc., et al 3:18-cv-02062-VLB — On December 14, 2018, investors sued XPO Logistics, Inc. (“XPO” or the “Company”) in United States District Court, District of Connecticut. Plaintiffs in the XPO class action allege that they acquired XPO stock at artificially inflated prices between February 26, 2014 and December 12, 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 on the XPO lawsuit, please contact us today!
Summary of the Allegations
Formerly known as Express-1 Expedited Solutions, Inc., XPO (NYSE: XPO) is a self-described “top ten global logistics company.”
As such, it provides transportation and logistics services to its customers throughout North America, Europe, the United Kingdom and Asia. In all, the Company claims it has operations in 32 countries and more than 1,500 locations.
According to its website, XPO has approximately 98,000 employees in its Transportation and Logistics divisions. Collectively, they cater to more than 50,000 customers in numerous industries, including but not limited to retail, e-commerce, food and beverage, manufacturing and technology and telecommunications.
Summary of Facts
The Company and two of its senior officers and/or directors (the “Individual Defendants”) now stand accused of deceiving investors by lying and withholding critical information about XPO’s business practices during the Class Period.
Specifically, they are now accused of omitting truthful information about the efficacy of its mergers and acquisitions (“M&A”) strategy and the use of certain accounting practices from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused XPO stock to trade at artificially inflated prices during the time in question.
The truth came out on December 12, 2018, when Spruce Point Management reported that a “forensic investigation into XPO” had uncovered “financial irregularities that conveniently cover [the Company’s] growing financial strain and inability to complete additional acquisitions despite repeated promises.” Among other things, the Spruce Point Management report also alleged that its investigation revealed “concrete evidence to suggest dubious tax accounting, under-reporting of bad debts, phantom income through unaccountable M&A earn-out liabilities, and aggressive amortization assumptions: all designed to portray glowing ‘Non-GAAP’ results.”
A closer look…
As alleged in the December 14 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For instance, on a form filed with the SEC at the beginning of the Class Period, XPO detailed the alleged benefits of its M&A strategy, saying in relevant part: “We take a disciplined approach to acquisitions: we look for companies that are highly scalable and a good strategic fit with our core competencies.”
In the same context, the Company also said in pertinent part: “When we acquire a company, we seek to integrate it with our operations by moving the acquired operations onto our technology platform that connects our broader organization. We gain more carriers, customers, lane histories and pricing histories with each acquisition, and some acquisitions add complementary services.”
Finally, another form filed with the SEC on February 29, 2016 included certifications signed by the Individual Defendants in accordance with federal law. In them, the Individual Defendants swore that the information on the form fairly represented, in all relevant aspects, “the financial condition and results of operations of the Company.”
Impact of the Alleged Fraud on XPO’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 February 12, 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 XPO 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.