A motion for preliminary approval of a class action settlement was filed in California federal court on December 19, 2017 by investors in Marvell Technology. Under the deal, Marvell will pay pay $72.5 million to end an investor class action alleging the company’s stock dropped 16 percent after inflated revenue projections proved false.
The settlement comes after U.S. District Judge William Alsup certified the case as a class action.
The suit, filed in September 2015, claimed Marvell borrowed from future sales to inflate its quarterly revenue numbers in filings with the SEC, and that these “pull-in transactions” were the result of a numbers-obsessed culture at the company. The suit was filed soon after the company reported a loss of $382.4 million for its fiscal second quarter, a period analysts had predicted would end in an $11.9 million profit. When the news hit, Marvell stock took a 16 percent hit of $1.71 per share.
PricewaterhouseCoopers LLP, Marvell’s longtime auditor, resigned in 2015, raising questions about whether management knew of the securities violations.
