MAKO Surgical is sued by Investors for failing to disclose a business downturn
MAKO Surgical Sued in Florida (Walter Eisner @ OTW)
Well that didn’t take long.
Just a few days after MAKO Surgical Corporation announced that it missed consensus revenue and earnings estimates, a shareholder filed a lawsuit in U.S. District Court for the Southern District of Florida against the company, along with its President and CEO, Maurice Ferré, M.D. and CFO Fritz Laporte. The company was expected to have sales of around $23.8 million, but came in at $19.6 million.
A day after the May 7 announcement the company’s common stock price fell 37%.
The shareholder, James H. Harrison, Jr. is proposing a class action lawsuit by other shareholders against the company. He hired a Florida law firm, which immediately issued a press release seeking more clients. Law firms frequently issue press releases announcing that they are “investigating” a company and fish for clients. We usually do not help them on these fishing expeditions, but in this case, Harrison has actually filed a suit.
Companies sometime do get hit with a shareholder class action lawsuit after share prices drop significantly. The issue in this case will be whether the company and its executives misled investors about material facts, and did so intentionally.
The complaint, announced on May 10, alleges that defendants issued materially false and misleading statements regarding the Company’s financials and future business prospects.
“Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company was poised to suffer a wider first quarter loss as it was experiencing higher costs and slower sales of its RIO systems; (ii) that utilization rates of the Company’s RIO systems were dropping; (iii) that the Company’s 2012 outlook provided at the start of the Class Period lacked a reasonable basis when made; and (iv) that, based on the above, defendants lacked a reasonable basis for their positive statements about the Company or its outlook,” said the release from the law firm.
The company reportedly did not respond to request for comment about the lawsuit from local media.