Update: This case has been settled for a total of $29.7 million, pending approval.
Pomerantz LLP has filed a class action lawsuit against MagnaChip Semiconductor Corporation ("MagnaChip" or the "Company") and certain of its officers. The class action, filed in United States District Court, Northern District of California, and docketed under 3:14-cv-01160, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired MagnaChip securities between January 30, 2013 and March 11, 2014, both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
MagnaChip Semiconductor Corporation designs and manufactures analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip Semiconductor Corporation provides its products and services to consumer electronics OEMs, subsystem designers, and contract manufacturers through a direct sales force, as well as through a network of authorized agents and distributors in the United States, Korea, Taiwan, China, Japan, Hong Kong, and Macau.
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 lacked adequate controls over financial reporting; (ii) the Company was improperly recognizing revenues; (iii) the Company's prior financial statements required restatement; and (iv) as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
On Jan. 27, 2014, after the close of trading, the Company announced that it would postpone its fourth quarter 2013 earnings release and investor conference call, previously scheduled for Tuesday, January 28, 2014, to provide additional time for the Company to complete its review of its financial results for the fourth quarter and full year 2013. On this news, MagnaChip securities declined $1.41 per share, or over 8%, to close at $16.16 per share on January 28, 2014.
On March 11, 2014, the Company issued a press release announcing the need to restate its prior financial statements, as well as identifying material weaknesses in its internal controls. On this news, the Company's shares fell as much as $1.83, or about 13%, to as low as $12.50 in intraday trading on March 11, 2014.