Maxwell Technologies, Inc.

Case Details

Class Period: April 29, 2011 - March 19, 2013
Date Filed: March 13, 2013
Case Number: 3:13-cv-00580
Jurisdiction: Southern District of California
icon-casetype Case Type: Securities Case

Case Summary

The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Maxwell Technologies, Inc. and certain of its senior executives. The Complaint alleged 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 Maxwell common stock during the class period.

Defendant Maxwell develops, manufactures and markets energy storage and power delivery products, and microelectronic products worldwide.

Specifically, the Complaint alleged that Defendants misled investors by, (1) overstating Maxwell’s revenues and earnings in 2011 and 2012 to meet or exceed Wall Street’s expectations, requiring restatement of nearly two years of the Company’s SEC filings; (2) reporting revenues prior to the time the sales price was fixed and/or collection was reasonably assured; and (3) having internal accounting controls that permitted this premature recognition of revenue. Defendants’ accounting fraud began to unravel on April 26, 2012, when the Company announced disappointing financial results because of a marked buildup in excess inventory caused by Defendants’ illicit payment plan extensions and distribution channel abuses. Defendants’ misconduct was further revealed on March 7, 2013, when the Company was forced to admit to the falsity of its previously-issued financial statements and to disclose that it had improperly recognized revenues during the class period. The Company also announced the terminations and resignations of several executives that were purportedly solely responsible for the misconduct. On this news, the Company’s shares declined substantially. However, in announcing the restatement, Defendants still downplayed its significance, stressing that the prematurely-recognized revenues were due to a timing issue and that the effects of the restatement were marginal. The magnitude of Maxwell’s deficiencies was then further revealed on March 19, 2013, when the Company announced the sudden resignation of its independent auditor. Following this announcement, the Company’s stock price plummeted, falling nearly 21%. On April 30, 2013, Maxwell disclosed that both the DOJ and the SEC were investigating the Company concerning its illicit revenue recognition practices.

On October 24, 2013, the Court appointed Saxena White P.A. as Lead Counsel, noting the firm’s  “extensive experience litigating securities class actions,” and how it “has successfully prosecuted numerous securities fraud class actions on behalf of investors.”

After filing two amended consolidated complaints, the parties began discussions towards a possible resolution of the action, including a full-day mediation on August 24, 2014. As a result of these discussions, Saxena White successfully negotiated an agreement to settle the claims  for $3,300,000 for the benefit of the class. On November 3, 2014, the Court granted preliminary approval of the settlement and then on February 17, 2015, entered a final judgment finding the settlement to be fair, adequate and reasonable in all respects.