Investors Sue CenturyLink, Accuse Company of Making ‘False and Misleading’ Statements
CenturyLink is facing a flurry of class-action lawsuits filed on behalf of investors who purchased stock in the company between Aug. 8, 2012, and Feb. 14, 2013.
The lawsuits stem from CenturyLink’s announcement on Feb. 13 that due to weaker than expected financial results, it would cut its dividend by more than one-quarter, from 72.5 cents to 54 cents per share.
CenturyLink also announced a new capital allocation initiative, under which it authorized the repurchase of up to $2 billion of its outstanding common stock. Upon this news, shares of CenturyLink fell from a close of $41.69 on the day of the announcement to a close of $32.27 the following day.
On June 27, New York law firm Pomerantz Grossman Hufford Dahlstrom & Gross announced that it had filed a securities class action claim against CenturyLink and its officers. The lawsuit alleges violations of the federal securities laws, specifically Rule 10b-5 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and seeks to recover damages from the company, as well as its officers and directors.
The securities class-action claim also alleges that Glen Post, who was serving as CEO of CenturyLink at the time and is named as a defendant in the lawsuit, sold more than $4.3 million in stock when the company’s shares were being artificially inflated by the statements of the defendants. The lawsuit claims that both the volume of the stock that Post traded and the times when he made his transactions were abnormal in nature.
On June 21, another New York law firm, Levi & Korsinsky, announced that they had commenced a lawsuit on behalf of the affected investors in the U.S. District Court for the Southern District of New York. The suit alleges that CenturyLink made “false and misleading” statements about its dividend cut and both misled investors on the strength of its free cash flow and that “as a result of the Company’s misleading statements, CenturyLink stock traded at an artificially inflated price.”
A lawsuit filed by Connecticut-based Scott+Scott, Attorneys at Law on June 5 alleges violations of the Securities Exchange Act of 1934.
Also on June 5, a securities class action lawsuit was filed by Zeldes Haeggquist & Eck, which is based in San Diego, Calif.
