The Complaint brings forth claims for violations of the Securities Exchange Act of 1934 against GTT Communications Inc. (“GTT” or the “Company”), and certain of its senior executives. The Complaint alleges that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired GTT common stock during the Class Period.
GTT provides cloud networking services to multinational companies. Since 2015, the Company pursued growth through “tuck-in” acquisitions. However, in February 2019, in sharp contrast to its historical strategy of acquiring smaller corporations, GTT announced that it was purchasing Interoute Communications Holdings S.A. (“Interoute”), a telecommunications company that operated Europe’s largest cloud services platform in a transformational $2.3 billion acquisition that essentially doubled GTT’s size.
Specifically, the Complaint alleges that Defendants failed to disclose that: (1) there were delays in migrating Interoute’s legacy systems and process into GTT’s client management database; (2) Interoute had made a strategic shift to focus on providing cloud services that deviated from GTT’s core cloud networking business; and (3) Interoute’s sales force was underperforming and ineffective at selling GTT’s core cloud networking services. Then, on May 8, 2019, GTT disclosed a larger than expected loss for the first quarter of 2019, blaming its poor performance on a host of issues with the Interoute integration, among other things, causing GTT’s stock price to plummet, for a two-day decline of over 25%. GTT’s stock price continued to decline over the next two months, as analysts questioned the Company’s business model, appropriateness and timeliness of its disclosures, and whether the Company utilized aggressive accounting to mask slowing revenue growth. Since the Company’s May 8 disclosures and in reaction to new information disclosed in analyst reports, GTT’s stock price has declined by more than 65% – from over $40 on May 7, 2019 to a recent low of under $13 per share – wiping out over $1.5 billion in shareholder value.
On January 7, 2020, the Court appointed the City of Atlanta Police Pension Fund and the City of Atlanta Firefighters’ Pension Fund (collectively, the “Atlanta Pension Funds”) as Lead Plaintiffs. The Court also appointed Saxena White P.A. as Lead Counsel.
On February 28, 2020, Lead Plaintiffs filed their Amended Complaint. On June 5, 2020, Defendants’ Motion to Dismiss the Amended Complaint was fully briefed. On June 22, 2020, the Court denied Defendants’ Motion to Dismiss in its entirety stating that it was “of the opinion that the Complaint state[d] a claim upon which recovery can be had.”
Lead Plaintiff filed its Motion for Class Certification August 7, 2020. On September 3, 2020 Defendants informed Lead Plaintiff that they would not oppose Class Certification. To that end, the Parties filed a joint stipulation and proposed order requesting that the Court certify the Action, which the Court granted on September 10, 2020.
Subsequently, in response to new information contained in a form 8-K that GTT filed on September 15, 2020, Lead Plaintiff drafted a Second Amended Complaint to include allegations of additional false and misleading statements by Defendants concerning the effectiveness of GTT’s internal controls and the accuracy and completeness of the quarterly and annual financial results reported by the Company during the Class Period. This Complaint became effective on October 16, 2020, after the Court granted Lead Plaintiff leave to amend.
After more than a year of hotly contested litigation conducted on an expedited schedule, on December 14, 2020, Lead Plaintiff filed an Unopposed Motion for Preliminary Approval of Settlement to approve a $25 million settlement agreed upon by the parties in the Stipulation and Agreement of Settlement and to certify a proposed Settlement Class for the class alleged in the Second Amended Complaint.
On January 28, 2021, the Court issued an order preliminarily approving the settlement. On March 19, 2021, Lead Plaintiff filed a Motion for Final Approval of Class Action Settlement, Plan of Allocation and Request for Attorneys’ Fees and Expenses. A settlement hearing has been scheduled for April 23, 2021 at 10:00 a.m.
The deadline to submit a claim is June 6, 2021.