Pomerantz LLP announces that a class action lawsuit has been filed against Roadrunner Transportation Systems Inc. (“Roadrunner” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Eastern District of Wisconsin, is on behalf of a class consisting of investors who purchased or otherwise acquired Roadrunner securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
Roadrunner provides asset-light transportation and logistics services provider that purports to offer a comprehensive suite of global supply chain solutions, including truckload logistics, customized and expedited less-than-truckload, intermodal solutions, freight consolidation, inventory management, expedited services, air freight, international freight forwarding, customs brokerage, and transportation management solutions. Roadrunner utilizes a broad third-party network of transportation providers, comprised of independent contractors and purchased power providers, with a focus on mid-size shippers. At all relevant times Morgan Southern, Inc. (“Morgan Southern”) and Bruenger Trucking (“Bruenger”) were among the Company’s subsidiaries.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company’s Morgan Southern and Bruenger subsidiaries had engaged in improper accounting practices; (ii) Roadrunner lacked effective internal controls; (iii) as a result, Roadrunner overstated its earnings throughout the Class Period by tens of millions of dollars; and (iv) as a result of the foregoing, Roadrunner’s financial statements were materially false and misleading at all relevant times.
On January 30, 2017, post-market, Roadrunner announced that in November 2016, the Company “was made aware of various potential accounting discrepancies at its Morgan Southern and Bruenger operating subsidiaries” and commenced an investigation with the assistance of outside counsel. While the investigation remains ongoing, Roadrunner advised investors that the Company “currently estimates it will require prior period adjustments to Roadrunner’s results of operations of between $20 million and $25 million” in the Company’s annual and quarterly financial reporting for the years 2014, 2015, and 2016. Roadrunner advised investors that the errors “principally relate to unrecorded expenses from unreconciled balance sheet accounts including cash, driver and other receivables, and linehaul and other driver payables,” and that the Company is reassessing its internal controls over financial reporting and its compliance programs.
On this news, Roadrunner’s share price fell $3.62, or 31.37%, to close at $7.92 on January 31, 2017.