Envivio Hit with Securities Class Action Lawsuit
By Christina Drury
A significant drop in the expected revenue for Envivio (NASDAQ: ENVI) has resulted in the filing of a securities class action lawsuit. The lawsuit claims that Envivio had blatantly overstated its expected revenues and kept pertinent information from the investors who were purchasing securities and thus, violated Securities Act of 1933 – the act that was established to regulate both the offer and the sale of securities. Since the initial purchase offering (IPO), the value of Envivio’s securities has plummeted 79% calling for the filing of the securities fraud lawsuit.
Envivio was not upfront about Activities
The main complaint in this class action lawsuit is the fact that Envivio was not directly upfront about certain business activities that affected the company’s revenue. Capital spending is where Envivio makes a substantial amount of its income and with budgetary restrictions preventing many customers from purchasing capital assets in the multi-screen video industry; the transactions were taking much longer to occur. The company lengthened its sales cycle to account for this delay in payment and as a result inflated their expected earnings for the quarter ending on July 31, 2012. Prior to the sale of the IPO, they quoted expected revenue between $17-18 million, but revealed in August of 2012 that the actual revenue was estimated between $10-11 million.
Truth Angers Investors
The investors who purchased securities based on incorrect information are claiming that the misleading by Envivio is a violation of the Securities Act of 1933, and as such are calling for recovery of the investments made. With both unfavorable results filed in the quarter ending on July 31, 2012 which resulted in a 56% decline in the stock price, and the quarter ending September 6, 2012 resulting in a further 23% decline, the Envivio stock was never worth what investors were told.
Lead Plaintiff Still Sought
The securities class action lawsuit against Envivio is still searching for a lead plaintiff who will be responsible for directing the litigation on behalf of the other plaintiffs involved. Only investors who purchased Envivio securities either at the IPO or following it are considered for the lead plaintiff position. Applications are being accepted until February 18, 2013. Investors who are claiming the largest losses will be chosen.
Recover Your Investments
If you or someone you know has invested in Envivio stocks based on the information provided by Envivio during the class action period, you may be eligible for recovery of your investment. To get more information on your options and to submit your contact information to qualified attorneys, you can visit our Securities Fraud, Stock Fraud Investment Class Action Lawsuit Investigation page. Qualified attorneys are currently investigating the claims made against Envivio and are seeking the recovery of investments made due to inadequate information.
Updated January 21st, 2013
All securities fraud class action and lawsuit news updates are listed in the Stocks & Securities section of Top Class Actions
