- Company Name
- Aceto Corporation
- Stock Symbol
- Class Period
- August 25, 2017 to April 18, 2018
- Motion Deadline
- June 24, 2018
- Eastern District of New York
The complaint charges Aceto and certain of its officers with violations of the Securities Exchange Act of 1934. Aceto developments, markets, sells and distributes finished dosage form generic pharmaceuticals, nutritionals, pharmaceutical intermediates, active pharmaceutical ingredients, specialty chemicals and agricultural protection products internationally.
The complaint alleges that, throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Aceto’s business, operations and financial results, including that Aceto had failed to implement and enforce proper internal control to identify the misapplication of cash, which would cause the Company to incur large non-cash intangible asset impairment charges, and that the Company lacked effective internal control over financial reporting such that its financial results for fiscal year 2017 could not be relied upon and its fiscal 2018 financial guidance was overstated. As a result of defendants’ false statements and/or omissions, Aceto securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of $17.08 per share.
Then on April 18, 2018, after the market closed, Aceto issued a press release, entitled “ACETO Board Takes Proactive Steps to Address Business and Financial Challenges,” which disclosed that the Company’s "financial guidance issued on February 1, 2018, should no longer be relied upon," and that it had suspended "further financial guidance for at least the balance of the fiscal year." The Company also revealed that it "anticipate[d] recording non-cash intangible asset impairment charges, including goodwill, in the range of $230 million to $260 million on certain currently marketed and pipeline generic products as a result of continued intense competitive and pricing pressures." Aceto further disclosed that its Chief Financial Officer, who had joined the company just two months earlier, had resigned. Following these disclosures, the price of Aceto shares fell $4.74 per share, or 64%, to close at $2.66 per share on April 19, 2018.