The U.S. District Court for the Central District of California has dismissed a class action lawsuit against InfuSystem (NYSE:INFU) alleging that the company, its ex-CEO and former chief finance executive violated federal securities laws by misleading investors with its financial statements.
The case was brought against InfuSystem in Nov. 2016, after the company and its former CEO, Eric Steen, alongside former CFO Jonathan Foster, informed investors that its financial statements dating back to 2015 couldn’t be relied upon.
InfuSystem said that in those reports, the company had overstated its estimated accounts receivable, which inflated its revenue and pre-tax income figures by $3.3 million, according to the initial complaint.
After the company came forward about the trouble with its financial reporting, its shares fell -38% to close at $1.60 apiece on Nov. 7, 2016.
The shareholder who brought the class action suit against InfuSystem argued that the company violated federal securities laws when it failed to tell investors that it “lacked effective internal control over financial reporting.”
The company filed a motion to dismiss the complaint in June last year and in December, the court dismissed the plaintiff’s first amendment to the complaint. The court later extended the plaintiff’s time to amend the complaint up to Jan. 19, but the plaintiff never filed an amendment. By the end of the month, the court had dismissed the suit.