NEW YORK (Legal Newsline) – An identity solutions provider and several of its senior executives are being sued over claims it made false and misleading statements to investors.
Elad Wexler, individually and for all others similarly situated, filed a class action lawsuit Dec. 9 in the U.S. District Court for the Southern District of New York against SuperCom, Arie Trabelsi, Tsviya Trabelsi, Ordan Trabelsi, Barak Trabelsi, and Simona Green, alleging violations of federal securities laws.
Wexler and others in the class bought common stock of Herzliya, Isreal-headquartered SuperCom between June 1 and Nov. 27.
The suit states SuperCom has employed subterfuge to raise capital from the U.S. capital markets at fraud-inflated prices. After obtaining its NASDAQ listing, in December 2013 SuperCom issued and sold 3 million shares in an underwritten stock offering in the U.S. at $4 per share, making more than $12 million in gross proceeds, the suit claims.
In 2015, the company reported large revenue increases, surging the market price of SuperCom shares, but on Sept. 30, the company received a letter from the Securities Exchange Commission challenging certain errors in its 2014 annual financial report and demanding broader explanations of changes to sources of reported revenue.
On Nov. 17, SuperCom reported that its "acting" Chief Financial Officer Simona Green was leaving and that no replacement had been selected, and that it was bringing in a new chief information officer.
When SuperCom disclosed on Nov. 30 its preliminary third quarter 2015 results for the period that ended Sept. 30, it acknowledged it significantly missed its own revenue target and would be forced to cut its fiscal year 2015 revenue and earnings guidance.
The suit states the company claimed the purported revenue could not be recognized during the quarter, despite previously claiming to have a strong and broadening pipeline.
SuperCom also disclosed that its newly appointed acting CFO would need until at least December to reconcile the company's financial reporting.
On this news, SuperCom common stock prices plummeted, damaging investors.
Wexler and others in the class seek compensatory damages, interest, injunctive relief, attorney fees, and other costs of the suit. They are represented by attorneys Samuel H. Rudman and Mary K. Blasy of Robbins Geller Rudman & Dowd in Melville, New York, and by attorneys Frank J. Johnson and W. Scott Holleman of Johnson & Weaver in San Diego and New York.
U.S. District Court for the Southern District of New York Case number 1:15-CV-09650-PGG