Marrone Bio Innovations Inc. of Davis has been hit with at least four shareholder lawsuits since announcing it has launched an internal investigation into its quarterly financial reporting.
The lawsuits have all been filed by law firms that specialize in shareholder class-action lawsuits against publicly traded corporations. In each case, the Davis biotech company has been accused of violating federal securities laws and making “false and misleading” statements to investors.
Such lawsuits are common after a publicly traded company discloses problems with its finances. The most recent of the lawsuits was announced Tuesday morning by a Boston law firm. The suits have all been filed in U.S. District Court in Sacramento.
On Sept. 3, Marrone Bio said it started an in-house probe after discovering documents that could force it to restate its financial results from the fourth quarter of 2013. The company’s stock price took a steep drop that day and hasn’t recovered since. The stock gained a penny Tuesday to close at $3.06 on the Nasdaq market.
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The lawsuits name as defendants the company, founder and Chief Executive Officer Pam Marrone, former Chief Financial Officer Donald Glidewell and current CFO James Boyd. One of the suits also names the board of directors and the investment banks that handled the company’s initial public stock offering in August 2013: Piper Jaffray & Co., Jefferies LLC, Stifel Nicolaus & Co. and Roth Capital Partners LLC.
The suits seek class-action status, in which a small group of shareholders would represent all investors.
“These kinds of things are not necessarily unexpected – not that we welcome them,” said Linda Moore, the company’s general counsel. “We’re addressing them as they come.” She wouldn’t discuss the specific allegations in the suits.
In its Sept. 3 statement, Marrone Bio said it found documents “calling into question the recognition of revenue in the fourth quarter of 2013 for an $870,000 transaction.” Because of that issue, the company said its earnings reports for the first six months of 2014 “should no longer be relied upon as being in compliance with generally accepted accounting principles.”
The disclosure came a month after Marrone Bio reported an unexpected drop in revenue for the second quarter. Although the young company has been unprofitable, its revenue had been growing steadily as it rolled out new products. Marrone Bio, founded in 2006, makes environmentally friendly pesticides.