Virgin Mobile USA sued over shady pre-IPO financial statements
By Will Park on Monday, January 21st, 2008 at 2:16 PM PST In Announcements, Financial, Virgin Mobile
It’s hard to believe that the Virgin Mobile USA (NYSE: VM) has finally been hit with class-action lawsuit related to their shady financial fibbing prior to the IPO. Oh wait, it’s not hard at all to see how this could happen.
The Pennsylvania-based Law Offices of Howard G. Smith has filed a class-action lawsuit claiming that Virgin Mobile USA misreported their financial performance ahead of their October IPO - which, not-so-coincidentally was a $412 million success. The now-public MVNO followed up on their IPO with a revised financial disclosure that indicated that the Virgin Mobile USA bottom-line showed a $7.3 million loss - resulting in a major drop in share prices.
Virgin Mobile USA preempted any legal accusations of purposeful misreporting by issuing a statement that any such claims are “completely without merit.” And, reports of the lawsuit prompted a broken-record-response from the MVNO to the effect that the claims are “completely without merit” and that Virgin Mobile USA will “defend the suit vigorously.” Virgin Mobile USA’s shares dropped another 20% on news of the lawsuit.
Did our favorite MVNO intentionally hide a $7.3 million loss in the name of giving its executives a nice $412 million bonus? We’re not going to say one way or the other, but we’re leaning towards shady corporate financial dealings.
[Via: RCRNews]
