This often occurs with creative accounting, and that is where the Robbins Geller law firm comes in.
Going After IBM
International Business Machines (IBM) has historically been a very successful long-term growth corporation, but regardless of corporate perception, misrepresentation of corporate performance happens with companies of all sizes. The behemoth companies like IBM can sometimes get away with actions that smaller companies cannot.
According to Yahoo News, On March 2, 2015 Robbins Geller Rudman & Dowd LLP filed a class action lawsuit on behalf of an institutional investor who claimed that false information provided by IBM management violating the Securities Exchange Act of 1934 influenced the investor’s decision to invest in company common stock during a class period that resulted in a significant decline in the stock value at the end of the period.
The suit filed by Robbins Geller Rudman & Dowd alleges that the multinational technology and consulting company omitted vital operational information concerning the projected growth of the company’s micro-chip division for the class period that would impact potential upcoming sales within the company product line.
The timeline is still open until May 1st for other investors who may want to join the class action suit based on the poor stock performance that was impacted by the omission. Deceit does not always happen with providing false information, as failure to disclose accurate vital information can be detrimental to the investor while artificially benefiting the company.
A representative from Robbins Geller discussed this case and another lawsuit against Alibaba with Digital Journal. As of press time, corporate defendants Alibaba and IBM have not responded to requests for comment.
Robbins Geller indicated that some of the investors involved in this class action lawsuit have inquired about switching the filing to contain a lead plaintiff. At this stage in the legal action, it is not yet necessary for eligible members to join the suit, but this will change shortly.
Robbins Geller also stated that the total market capitalization losses from IBM’s actions were valued at approximately $20 billion. The amount that is expected to come out of a class action settlement is smaller than this figure, and it will be based upon many factors such as what stage the lawsuit is at when an agreement is reached with IBM.
Exposing Alibaba’s Legal Problems
Alibaba has emerged quickly as one the major corporations in the Chinese economy, but they clearly have some misrepresentation problems within the company. Forbes reports that this unethical and potentially illegal activity being perpetrated by the Alibaba Corporation concerns selling fake goods, or “knock offs” of multiple products in violation of trademark and patent laws.
Alibaba is a multinational company, as well as IBM, but the Chinese government had expressed concerns in a meeting with company executives that they were potentially operating illegally by selling products on the Internet company website that were not authentic as advertised.
A recent survey of the Alibaba product line by the Science Applications International Corporation found that nearly 60% of the company’s product line is composed of fake products. The problem was compounded when it was revealed that Alibaba had omitted the fact that the Chinese government had met with Alibaba Chief Executive Officer Jack Ma concerning the falsely represented products.
Jack Ma at one time was the wealthiest entrepreneur in China, but has since fallen from the top spot after it was revealed that the government had talked to the company about illegal behavior a full two months before the Alibaba IPO that generated a monumental amount of operational cash for the company.
Robbins Geller is involved in legal action with the intention of helping investors recover at least some of the financial damages that resulted from Alibaba’s IPO. A representative from the law firm gave some clarification regarding the recourse that is available to U.S. investors who lost money in the Alibaba case: “The U.S. federal securities laws permit investors to pursue claims against corporate defendants for making materially misleading statements and omissions related to many different aspects of the business, including compliance with applicable regulations.”
In other words, Alibaba’s alleged fraudulent actions leave them open to litigation from U.S. investors. Robbins Geller points out that it is important to note that although some securities cases can result in a transaction rescission remedy, most of these issues “are resolved through the payment of monies to compensate investors for their damages.”
Largest IPO in History
At the time, the Alibaba IPO was described as the largest IPO in investment history, out-performing Facebook by approximately $4 billion after about a $20 billion investment intake in the initial offering.
The Facebook IPO had also generated some concerns about unethical or illegal behavior, when they issued more shares than they should have, resulting in a “watered down” stock issue surplus. Many of the investment banks tied to the IPO of Facebook filed formal complaints with the SEC with little results.
This triggered an immediate drop in the stock price the week after the IPO was complete. Facebook did bounce back after a short period and managed to escape legal action from investors who were not aware of the stock over-issue until the day following in what then had been the largest initial stock investment opportunity in investment history.
Alibaba experienced a stock price reduction that has not necessarily rebounded, possibly when it was revealed that the meeting with the Chinese government had been suppressed by the Alibaba management officials.
About Robbins Geller Rudman & Dowd LLP
Robbins Geller is well-known in the legal industry as a leading representative of whistle-blowers as well as investors who are concerned about false or omitted financial information provided before a stock offering was purchased.
They are considered one of the leading legal firms that thoroughly investigates, and then litigates, large-scale investment fraud. Fraud that they investigate typically involves major companies using overwhelming levels of business records as a deceptive form of operational camouflage within corporate business financial structure.
