Avaya Holdings Corp
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On July 28, 2022, Avaya announced the termination of its Chief Executive Officer. The Company also announced that preliminary financial results for its third quarter 2022 fell below previously given guidance and withdrew its fiscal 2022 guidance.
On this news, Avaya’s stock price fell $1.19, or 57%, to close at $0.90 per share on July 29, 2022, thereby injuring investors.
Then on August 9, 2022, Avaya disclosed that there was “substantial doubt about the Company’s ability to continue as a going concern.” The Company also announced that its audit committee was investigating a whistleblower letter as well as the circumstances surrounding its recent earnings report. Avaya also stated that it would not timely file its financial statements for the quarter ended June 30, 2022.
On this news, Avaya’s stock price fell $0.51, or 45.5%, to close at $0.61 per share on August 9, 2022, thereby injuring investors further.
Then, on November 20, 2022, Avaya disclosed that there were material weaknesses in its internal control over financial reporting. Specifically, the Company did not maintain effective controls to ensure effective communication between certain functions and did not maintain effective controls over the ethics and compliance program.
On this news, Avaya’s stock price fell $0.16, or 14.3%, to close at $0.96 per share on November 30, 2022.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) the Company’s internal control over financial reporting (“ICFR”) was deficient in several areas; (2) as a result of these deficiencies, the Company had failed to design and maintain effective controls over its whistleblower policies and its ethics and compliance program; (3) the Company’s deteriorating financial condition was likely to raise substantial doubt as to its ability to continue as a going concern; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.