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Marvell Technology (MRVL) Securities Fraud Class Action Lawsuit

This lawsuit alleges that Marvell and its top executives oversaw a flawed process that resulted in serious revenue recognition problems in the second quarter of fiscal year 2016. First reports indicate that the company may have overstated revenues by 7 to 8%.

What investors are part of this class action? The class period is currently defined as purchasers of Marvell securities between November 20, 2014 and September 10, 2015, inclusive (the "Class Period"). Marvell Technology Group, LTD. common stock trades on the NASDAQ under the symbol "MRVL."

Procedural Status: This lawsuit was filed on September 11, 2015 and is captioned Luna v. Marvell Technology Group, et al. It was filed in the United States District Court for the Southern District of New York. Its civil docket number is 1:15cv07214. The lead plaintiff deadline is November 10, 2015.

Marvell Technology Group is a fabless semiconductor company, shipping more than a billion chips annually. Marvell's purported expertise in microprocessor architecture and digital signal processing drives multiple platforms including high volume storage solutions, mobile and wireless, networking, consumer and green products. 

The Company operates in a crowded, competitive and declining semiconductor market. Given the intellectual property challenges frequently brought by competitors, a firm of this type must hold sufficient funds in reserve for litigation, expenses and losses that can result. 

It is alleged that Marvell did not allocate sufficiently for these types of essential reserves and did not maintain proper controls over its financial reporting. The complaint states that severe misstatements of critical accounting metrics made their way into the Company's financial statements, misleading investors and failing to disclose material facts. Specifically, the plaintiff asserts that:

  • Marvell did not disclose or mislead about the fact that the Company had engaged in inppropriate and inaccurate revenue recognition practices, resulting in potential revenue overstatement of between 7-8%,
  • The Company's senior management encouraged a closed and ineffective control environment,
  • key accounting metrics were repeatedly and publicly misstated,
  • the Company consistently lacked adequate internal controls,
  • statements made by Defendants about Marvell's operations and prospects were false and/or lacked reasonable factual basis.

On September 11 of 2015, Marvell issued a press release in which it reported a loss of $382.4 million for the second quarter of Fiscal Year 2016, despite analysts having predicted, on average, a quarterly profit of $11.9 million. It was also announced that the Company could not timely file its first quarterly report due to an Audit Committee probe into its internal controls and accounting practices. It was also revealed that the Committee had concerns about the Company's procedures for establishing litigation reserves.

As a result of this news, Marvell shares fell $1.71 per share, representing a drop of over 16% to close at $8.84 on September 11. This decline caused the plaintiff and others similarly situated to sustain substantial financial losses, according to the complaint.

http://www.marvell.com/

http://www.bloomberg.com/quote/MRVL:US

Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

Shareholder sues Marvell for alleged revenue recognition errors

September 11, 2015

Here is the complaint.  The first complaint in a securities fraud case is always (or mostly always) a bare bones complaint.  It is only after the leadership structure is determined that the then-appointed lead plaintiff will fill a more detailed complaint.

marvell_securities_fraud_lawsuit.pdf

Case Event History

Shareholder sues Marvell for alleged revenue recognition errors

September 11, 2015

Here is the complaint.  The first complaint in a securities fraud case is always (or mostly always) a bare bones complaint.  It is only after the leadership structure is determined that the then-appointed lead plaintiff will fill a more detailed complaint.

marvell_securities_fraud_lawsuit.pdf
Tags: Revenue Recognition Errors, Securities Frauds, Stock Losses, Your Money