In re A10 Networks, Inc. Shareholder Litigation
Settled: Pending Court Approval
$9.837 million recovered on behalf of the class in case against application networking technology companyOn March 21, 2014, A10 Networks, Inc. (A10) went public in an initial public offering (IPO) that raised approximately $135 million and more than $57 million in gross proceeds for the selling shareholders.
The plaintiffs allege that the offering materials for the IPO made material misstatements in violation of securities fraud laws. They also alleged that the offering materials misrepresented and omitted that A10’s exceptionally strong revenue growth through 2013 was due significantly to existing customers’ one-time upgrades from its obsolete series of products—the AX Series—to A10’s newly released and improved series of products—the Thunder Series—rather than organic sales to new customers, and revenues from customer upgrades had waned by the time of the IPO.
The plaintiffs further alleged that the IPO offering materials misrepresented and failed to disclose that, among other things, A10’s important service-provider customers in North America were saturated with product, and bookings were falling as a result; and A10 overstated the value of its inventory by failing to properly write-down the value of obsolete inventory, such as A10’s AX Series product family. These challenges, among others, reversed the booking and revenue trends reported and touted in A10’s offering materials, causing future bookings and revenue to decline. When the action was filed, A10’s stock was trading 70 percent below the IPO price.
On July 8, 2016, the parties reached a $9.837 million settlement, subject to court approval, on behalf of the class.
The case is In re A10 Networks, Inc. Shareholder Litigation, No. 1-15-cv-276207 (Cal. Super. Ct. Santa Clara County). Labaton Sucharow served as co-lead counsel representing the plaintiffs Arkansas Teacher Retirement System, City of Warren Police and Fire Retirement System and Michael Kaveney. The defendants are A10 and certain of its directors, officers, and underwriters.