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Interface, Inc.

Case Details

Class Period: March 2, 2018 - September 28, 2020
Date Filed: November 12, 2020
Case Number: 1:20cv05518
Jurisdiction: New York Eastern District Court
Days Left to
Seek Plaintiff:
38

Case Summary

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) Interface had inadequate disclosure controls and procedures and internal control over financial reporting; (ii) consequently, Interface, inter alia, reported artificially inflated income and earnings per share (“EPS”) in 2015 and 2016; (iii) Interface and certain of its employees were under investigation by the Securities and Exchange Commission (“SEC”) with respect to the foregoing issues since at least as early as November 2017, had impeded the SEC’s investigation, and downplayed the true scope of the Company’s wrongdoing and liability with respect to the SEC investigation; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times. On April 24, 2019, Defendants filed a current report on Form 8-K with the SEC, disclosing, inter alia, that Interface “received a letter in November 2017 from the [SEC] requesting that the Company voluntarily provide information and documents in connection with an investigation into the Company’s historical quarterly [EPS] calculations and rounding practices during the period 2014-2017”; that “[t]he Company subsequently received subpoenas from the SEC in February 2018, July 2018 and April 2019 requesting additional documents and information”; and that “[i]n the fourth quarter of 2018, the Company conducted at the SEC’s request an internal investigation into these and other related issues for seven quarters in 2015, 2016 and 2017.” On this news, Interface’s stock price fell $1.43 per share, or 8.37%, to close at $15.66 per share on April 25, 2019. Then, on September 28, 2020, the SEC announced the conclusion of its investigation into Interface’s historical quarterly EPS calculations and rounding practices. Interface agreed to pay a $5 million fine to resolve the matter and was ordered to cease and desist from violating the federal securities laws. In the SEC’s enforcement order issued that same day, the SEC also disclosed how, inter alia, “Interface employees caused Interface to produce documents in response to Commission investigative requests that were suggestive of contemporaneous support for journal entries that, in truth, did not exist at the time the entries were recorded,” and had modified certain documents after the SEC’s investigation began. On this news, Interface’s stock price fell $0.20 per share, or 3.13%, over the following two trading sessions to close at $6.18 per share on September 29, 2020.

Documents
Complaint