On October 24, 2018, Pomerantz was appointed Lead Counsel in a class action lawsuit filed against Ubiquiti Networks, Inc. and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 17-cv-07524, is on behalf of a class consisting of investors who purchased or otherwise acquired Ubiquiti securities, seeking to recover compensable damages caused by defendants' violations of the Securities Exchange Act of 1934.
Ubiquiti develops technology platforms for high-capacity distributed Internet access, unified information technology, and next-generation consumer electronics for home and personal use. The Company does not employ a traditional sales force. Instead, it purports to "drive[] brand awareness largely through the company's user community where customers can interface directly with R&D, marketing, and support." The Company calls this user community the "Ubiquiti Community."
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the number of the Company's purported user community was drastically overstated; (ii) Ubiquiti had exaggerated its publicly reported accounts receivable; and (iii) as a result of the foregoing, Ubiquiti's publicly disseminated financial statements were materially false and misleading.
On September 18, 2017, Citron Research ("Citron") issued a report entitled "Citron Exposes Ubiquiti Networks," (the "Citron Report") in which Citron detailed a series of "alarming red flags," indicating that the Company has been deceiving investors and is engaged in "corporate fraud," including, among other things, that the Company has misrepresented the size of its purported "Ubiquiti Community", as well as its levels of accounts receivable, among other things.
On this news, Ubiquiti's share price fell nearly 8% to close at $50.62 on September 18, 2017.