The Complaint alleges that throughout the Class Period, Defendants misrepresented and concealed that: (i) OneSpan had inadequate disclosure controls and procedures and internal control over financial reporting; (ii) as a result, OneSpan overstated its revenue relating to certain contracts with customers involving software licenses in its financial statements spread out over the first quarter of 2018 to the first quarter of 2020; (iii) as a result, it was foreseeably likely that the Company would eventually have to delay one or more scheduled earnings releases, conference calls, and/or financial filings with the SEC; (iv) OneSpan downplayed the negative impacts of errors in its financial statements; and (v) all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company's financial results and reputation.
According to the Complaint, the market began to learn the truth on Aug. 4, 2020, when OneSpan postponed its Q2 2020 earnings release and conference call by 1 week, blaming the delay on prior period revenue recognition problems relating to certain software license contracts. OneSpan and senior management explained "[t]he net contract assets that originated from a portion of these assets in prior periods were not properly accounted for in subsequent periods, which caused overstatements of revenue."
Then, according to the complaint, on Aug. 11, 2020, OneSpan (1) announced it would not timely file its Q2 2020 financial statements on Form 10Q with the SEC, (2) revealed the revenue recognition problems stretched from Q1 2018 through Q1 2019, (3) reported that same quarter year-over-year revenues had declined, and (4) withdrew its FY 2020 earnings guidance.
On this news, OneSpan's common share price fell $12.36 per share, or nearly 40%.
"We're focused on investors' losses and proving OneSpan intentionally cooked its books," said Reed Kathrein, the Hagens Berman partner leading the investigation.
Whistleblowers: Persons with non-public information regarding OneSpan should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].
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