Shareholder Class Action Alleging Evoqua Water Technologies Corp. (AQUA) Made Materially False and Misleading Statements Survives Motion to Dismiss
According to the complaint, statements in Evoqua’s initial and secondary public offering documents regarding the Company’s intent to retain and “continue to invest” in its skilled sales force and senior management were misleading because Evoqua had “engaged in the systematic and pervasive termination of experienced sales personnel that devastated the businesses that Evoqua had acquired” and “eroded the Company’s ability to sustain current revenues and generate future growth.” The complaint further alleges that Evoqua engaged in a multitude of financial schemes that inflated its profitability on paper prior to its initial and secondary offerings. On October 30, 2018, Evoqua announced that its preliminary financial results for the fourth quarter and fiscal year ended September 30, 2018, fell below the company’s expectations. Evoqua attributed the disappointing results to acquisition system integration issues and supply chain disruptions influenced by tariffs, which had not previously been disclosed. On this news, Evoqua’s stock plummeted over 34% to close at $9.02 per share on October 30, 2018. Evoqua stock continues to trade significantly below its IPO price of $18.00. On March 30, 2020, U.S. District Court Judge Alison J. Nathan denied in part Evoqua’s motion to dismiss plaintiffs’ claims, paving the way for litigation to proceed.
