A federal class action lawsuit has been filed against Maxwell Technologies. The Briscoe Law Firm and the securities litigation firm of Powers Taylor are investigating additional legal claims against the officers and Board of Directors of Maxwell Technologies during the period of April 28, 2011 to March 7, 2013.
Some members of the company have been charged with violating certain provisions of the Securities Exchange Act of 1934 and have been accused of:
- Overstating its revenues and earnings in 2011 and 2012 in violation of Generally Accepted Accounting Principles
- Reporting revenues prior to the time the sales price was fixed and/or collection was reasonably assured
- Having deficient internal accounting controls that showed premature recognition of revenue, which lead to mis-stated financial results.
As a result of the misleading statements, Maxwell common stock traded at artificially inflated prices during the Class Period. However, after the above-alleged revelations of the true but undisclosed facts seeped into the market, the Company's common stock experienced exorbitant selling pressure sending its price down nearly 62% from its Class Period high.
In an earlier statement Maxwell Technologies announced that the error relates to the timing of recognition of revenue from sales to certain distributors.
The statement continues:
"The investigation discovered arrangements with certain distributors regarding the payment terms for sales to such distributors with respect to certain transactions. These arrangements had not been communicated to Maxwell's finance and accounting department and, therefore, had not been considered when recording revenue on shipments to these distributors."
"As a result of the arrangements discovered during the investigation, Maxwell does not believe that a fixed or determinable sales price existed at the time of shipment to these distributors, nor was collection reasonably assured, at least with respect to certain transactions. Therefore, the revenue from such sales should not have been recognized at the time of shipment to these distributors."
"Maxwell believes that the restatement of revenue related to these distributors will decrease previously reported revenues for fiscal year 2011 by approximately $6.5 million and decrease revenues in the first three quarters of 2012 by approximately $5.5 million in the aggregate."
"Maxwell also believes that the restatement of revenue related to these distributors will result in shipments to these distributors for which title has passed to the distributor, but for which the revenue recognition criteria has not been fully achieved, of approximately $12.0 million as of September 30, 2012. Of the shipments to these distributors that had not been collected as of September 30, 2012, and therefore not recognized as revenue, Maxwell collected $4.6 million in the fourth quarter of 2012 and $3.0 million to date in the first quarter of 2013, leaving $4.4 million outstanding that will be recognized as revenue as Maxwell receives payments in the future."
"As a result of the investigation, certain employees were terminated and Maxwell's Sr. Vice President of Sales and Marketing resigned. Their shares have dropped substantially over the last couple of weeks."