Pomerantz LLP announces that a class action lawsuit has been filed against BT Group plc (“BT Group” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 17-cv-00558, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired BT Group American Depositary Receipts (“ADRs”) between May 23, 2013 and January 23, 2017, inclusive (the “Class Period”), seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
BT Group is a multinational telecommunications services company that offers fixed-line services, broadband, mobile and TV products and services, and networked IT services in the United Kingdom and across the world. The Company also sells wholesale products and services to communications providers around the world. Globally, BT Group supplies managed networked IT services to multinational corporations, domestic businesses, and national and local government organizations.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company’s Italian division had for years engaged in improper accounting practices; (ii) as a result, BT Group significantly overstated its earnings throughout the Class Period; (iii) the foregoing facts, when they became known, would foreseeably cause BT Group to cut its revenue, earnings, and free cash flow forecasts; and (iv) as a result of the foregoing, BT Group’s public statements were materially false and misleading at all relevant times.
On October 27, 2016, BT Group announced that the Company had uncovered “inappropriate management behavior” at its Italian division. BT Group advised investors that the Company had “conducted an initial internal investigation” which “included a review of accounting practices during which we have identified certain historical accounting errors and reassessed certain areas of management judgment.” Consequently, the Company announced that it had “written down the value of items on the balance sheet by £145 [million].” On this news, BT Group’s ADR price fell $0.57, or 2.39%, to close at $23.25 on October 27, 2016.
On January 24, 2017, BT Group issued a news release entitled “Update on investigation into BT’s Italian business and on BT Group outlook.” On this news, BT Group’s ADR price fell $5.05, or 20.67%, to close at $19.38 on January 24, 2017.