Baltimore mobile advertising firm Millennial Media faces a class action lawsuit over whether it concealed the true condition of the company from shareholders.
The Mississippi state pension system has filed suit in federal court, alleging that the Maryland-based company and its executives made “false and misleading” statements and failed to disclose material information which, when revealed, caused the company’s stock to plummet. Two law firms representing the pension are seeking additional plaintiffs for the class action.
Millennial Media went public in March of 2012, raising $152 million in what seemed like a successful initial public offering. Since the IPO, however, shares have lost more than 90 percent of their value.
The company began as a startup in 2006 in Baltimore’s Emerging Technology Center. As it grew, it became a large presence in Canton’s Can Company development, which is currently being renamed the Millennial Media Center at the Can Company.
According to the lawsuit, however, during its IPO it failed to provide key information about the development of technology important to its products and about whether recent corporate acquisitions had proved disappointing. Millennial Media also omitted essential data when discussing the company’s financial prospects, including the fact that its CFO had resigned. When all became known, the stock price fell precipitously.
A company’s failure to disclose material facts to shareholders can have serious repercussions, from class action law suits to criminal charges in some cases. For corporate executives and directors, the best legal strategy is often prevention. Qualified securities lawyers and corporate counsel can minimize risk by striving to make securities filings complete and accurate. For shareholders, false disclosures can be difficult to detect in advance, but counsel can advise on litigation strategies if fraud should occur.
The experienced Bethesda and Rockville, Maryland business lawyers at Longman & Van Grack can assist you in all aspects of securities and corporate law, whether you are a company filing with the Federal government or an investor who has been harmed. Contact us at (301) 291-5027.