TAMPA, Fla. (WFLA) — A Jacksonville-based aerospace company is facing a class action lawsuit for allegedly violating federal securities laws. The lawsuit was filed on Dec. 17, according to court documents.
The case, filed by Jed Lemen, alleges that Jacksonville-based Redwire Corporation faced accounting issues in November 2021 and delayed releasing its third quarter earnings.
As a result, the company’s stock price fell 16%, after which the company told investors it was unable to “finalize its financial statements or its assessment of the effectiveness of its disclosure controls and procedures and any impact” on its quarterly earnings report.
Following the announcement, lawyers representing plaintiffs in the class-action lawsuit say Redwire’s stock price fell another 8.3%. Lemen opened the class-action lawsuit, alleging Redwire “made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects.”
Additionally, Redwire is currently under investigation for securities fraud. Law firm Block & Leviton is performing an audit of the company.
According to court documents, Redwire failed to tell its investors about the accounting issues in one of the company’s subunits, creating “material weaknesses in Redwire’s internal control over financial reporting.” The lawsuit says Redwire’s positive statements about business outlook were materially misleading, or lacked a reasonable basis.
Lemen, the main plaintiff of the class-action, alleges the misleading statements and stock price losses have made investors face “significant losses and damages” as a result of Redwire’s “wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities,” according to court documents.
On behalf of Redwire, CEO Peter Cannito and CFO William Read were named as defendants in the lawsuit. Lemen set a period from Aug. 11 to Nov. 14 as a targeted date range for what’s called a class period, when investors were allegedly financially harmed by actions of Redwire.
Redwire announced it could not file a timely quarterly report on Nov. 15, before markets opened. This is why Lemen and his attorneys set the class period through Nov. 14.
Lemen also alleges securities fraud.
“During the Class Period, the artificial inflation of Redwire’s shares was caused by the material misrepresentations and/or omissions particularized in this Complaint causing the damages sustained by Plaintiff and other members of the Class,” according to court documents.
The court documents detail Lemen’s complaint, saying the defendants from Redwire “employed devices, schemes, and artifices to defraud; made untrue statements of material fact and/or omitted to state material facts necessary to make the statements not misleading; and engaged in acts, practices and a course of business which operated as a fraud and deceit” to those who purchased the company’s securities, or stocks and kept prices “artificially high.”
The plaintiffs are demanding a trial by jury for the lawsuit. Lemen, as plaintiff, is represented by Desmond Law Firm, P.c. in Vero Beach, Fla., Glancy Prongay & Murray LLP in Los Angeles, Calif., and the Law Offices of Howard G. Smith in Bensalem, Penn.
Redwire, and its individual defendants, is represented by Shutts & Bowen LLP in Jacksonville and Kirkland & Ellis LLP in New York.
8 On Your Side has reached out to attorneys for Redwire to request comment on the lawsuit.