NEW YORK (May 11, 2016) – Labaton Sucharow LLP is pleased to announce that the Firm reached a settlement of more than $6 million, subject to court approval, on behalf of Plymouth County Retirement System in a securities class action against InnerWorkings, Inc., a global marketing supply chain company, in Van Noppen v. InnerWorkings, Inc., No. 14-cv-1416 (N.D. Ill.).
Labaton Sucharow partner Jonathan Gardner served as lead counsel representing lead plaintiff Plymouth County Retirement System, alleging that during the class period (February 15, 2012 to November 16, 2013), InnerWorkings was involved in a fraudulent accounting scheme which consisted of, among other things, creating fake invoices for design work, falsifying revenue figures over the company’s subsidiaries, and quashing internal audits.
Specifically, InnerWorkings’ revenues were allegedly inflated in violation of Generally Accepted Accounting Principles (GAAP), a common set of standards and procedures that companies use to compile their financial statements. Also, the company's recently acquired subsidiary Production Graphics, which was important for InnerWorkings' expansion in Europe, allegedly had been artificially inflating its cash flows and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by engaging in sham transactions.
On April 16, 2013, the news was revealed alleging there was a reduction in work orders by a large retail client, and the prices of InnerWorkings’ securities fell more than 25 percent. Shortly after on April 30, 2013, a report was published alleging that the company was inflating revenues by misapplying gross revenue and net accounting, which led to an additional three percent decline of the company’s stock price. Finally, on November 6, 2013, the company announced lower than expected earnings, blaming the shortfall on Production Graphics. Upon this news, the share price dropped more than 40 percent.
Plymouth County Treasurer Thomas J. O’Brien remarked, “At Plymouth County, we are tireless advocates in support of our investors, pursuing fraud and striving to right any wrongs resulting from corporate misdeeds. We are pleased with the result achieved and thank the attorneys at Labaton Sucharow who worked diligently on our behalf.”