WEST PALM BEACH -- A Florida-based telecommunications infrastructure company and its leading executives misled investors about the company's expected growth ahead of a sharp drop in its stock price earlier this year, according to a putative federal securities class action filed this week.
The lawsuit, filed on Oct. 25 in the U.S. District Court for Florida's Southern District, West Palm Beach Division, alleges that Dycom Industries and its top executives issued false and misleading statements about the company's operations and prospects.
"Specifically, defendants failed to disclose that: (i) Dycom’s large projects were highly dependent on permitting and tactical considerations, (ii) Dycom was facing great uncertainties related to permitting issues; (iii) said uncertainties would expose Dycom to near-term margin pressure and absorption issues, and (iv) as a result of the foregoing, Defendants’ statements about Dycom’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis," the 25-page lawsuit says.
Investor Jennifer Tung brought the class action under the Securities Exchange Act of 1934 on behalf of all investors who obtained Dycom common stock between Nov. 20, 2017, and Aug. 10, 2018. Dycom is named as a defendant in the case along with CEO and President Steven Nielsen and CFO and Senior Vice President Andrew DeFerrari.
Dycom is based in Palm Beach Gardens.
"During the class period, as detailed herein, defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated the company’s stock price, and operated as a fraud or deceit on acquirers of the company's common stock," the lawsuit says. "As detailed above, when the truth about Dycom's misconduct and its lack of operational and financial controls was revealed, the value of the Company’s common stock declined precipitously as the prior artificial inflation no longer propped up its stock price."
Things came to a head this spring when the price of Dycom's common stock dropped more than 20 percent over a single day in May and continued downward into the summer, according to the lawsuit.
An investigation by the plaintiff's counsel reviewed Dycom's U.S. Securities and Exchange Commission filings, regulatory filings and reports, securities analyst reports and advisories, press releases, public statements and media reports, according to the lawsuit. "Plaintiff believes that additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery," the lawsuit says.
The case has been assigned to U.S. District Court Judge Robin Rosenberg.
The lawsuit was filed on behalf of Tung and the putative class by Fort Lauderdale attorney Cullin O'Brien and Liaison Counsel Eduard Korsinsky of Levi & Korsinsky in New York under case no. 9:18-cv-81448-RLR.