Pomerantz LLP announces that a class action lawsuit has been filed against Celadon Group, Inc. (“Celadon” 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-03806, is on behalf of a class consisting of investors who purchased or otherwise acquired Celadon securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
Celadon, through its subsidiaries, provides long-haul, full-truckload freight service across the United States, Canada, and Mexico. The Company also provides supply chain management solutions such as warehousing and dedicated fleet services, as well as freight brokerage services.
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) Celadon’s equity contribution to its joint venture with Element Financial Corp. was $68.2 million, rather than the $100 million contribution the Company reported in its public filings; (ii) the Company is being actively investigated by the SEC; (iii) Celadon had errors in previously reported consolidated financial statements related to its accounting of transactions involving dispositions and acquisitions of revenue equipment; (iv) in turn, the Company lacked effective internal controls over financial reporting; and (v) as a result of the foregoing, Celadon’s public statements were materially false and misleading at all relevant times.
On April 5, 2017, the market research website Seeking Alpha published a detailed report authored by a Prescience Point Research Group, entitled “Celadon Group: A Story That Ends At Chapter 11,” which, among other things, alleged that “CGI has used …. manipulative accounting practices to hide its insolvent condition from investors and creditors.”
On this news, Celadon’s share price fell $0.85, or 13.6%, to close at $5.40 on April 5, 2017.
On April 19, 2017, the same prominent market research group published another report entitled “FOIA Requests Reveal CGI as the Subject of an Active SEC Investigation,” which reported that the research group was denied information about Celadon sought under the Freedom of Information Act (“FOIA”) due to an ongoing SEC investigation.
On this news, Celadon’s share price fell $0.20 or 4.55%, to close at $4.20 on April 19, 2017.
On May 1, 2017, post-market, Celadon issued a Current Report filed on Form 8-K in the SEC, stating that “the Company's financial statements for the fiscal year ended June 30, 2016 and quarters ended September 30 and December 31, 2016, and related reports of [Celadon’s auditor], should not be relied upon.”
On this news, Celadon’s share price fell $2.20, or 55%, to close at $1.80 on May 2, 2017.