Cintas Corporation Class Action Lawsuit
- Company Name
- Cintas Corporation
- Stock Symbol
- Class Period
- March 6, 2017 to November 13, 2019
- Southern District of Ohio
On December 12, 2019, the Cintas Corporation class action lawsuit was filed charging Cintas and certain of its officers with violations of the Securities Exchange Act of 1934. The Cintas class action lawsuit was commenced in the Southern District of Ohio on behalf of purchasers of Cintas publicly traded securities between March 6, 2017 and November 13, 2019 (the “Class Period”) and is captioned Stafford v. Cintas Corporation, et al. No. 19-cv-01054.
Cintas provides corporate uniforms and related business services in North America, Latin America, Europe, and Asia. In March 2017, Cintas acquired G&K Services, Inc. (“G&K”), a Minnesota-based company that provides services related to the rental and laundering of branded uniforms.
The Cintas class action lawsuit alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Cintas’s business and operations, including information regarding its integration of G&K. Specifically, defendants failed to disclose that, contrary to their statements that the G&K acquisition would improve Cintas’s margins when discussing the acquisition with investors, Cintas never developed or implemented measures to track Cintas’s legacy margins following the G&K acquisition. In addition, Cintas repeatedly set low financial projections, only to raise and beat them as part of a “Beat and Raise” scheme, and materially breached the law on at least three occasions, which could jeopardize Cintas’s credit agreement. As a result of this information being withheld from the market, Cintas securities traded at artificially inflated prices during the Class Period, with its shares reaching a high of more than $275 per share.
Then on November 13, 2019, Spruce Point Capital issued a report on Cintas alleging that Cintas had never developed or implemented measures to track its legacy margins, that Cintas had repeatedly set low financial projections only to raise and beat them, and that Cintas’s Fire Protection Services business had materially breached the law on at least three occasions, jeopardizing its credit agreement. According to Spruce Point, it was able to obtain information through a Freedom of Information Act request regarding Cintas’s Fire Protection Services’ breaches of law, including unlicensed employees of Cintas filling out paperwork regarding fire systems in buildings in Illinois and Indiana, and Cintas’s failure to ensure that a haul truck’s fire suppression system was installed and maintained resulting in a death on September 7, 2018. On this news, the price of Cintas shares fell $3.61 per share to close at $255.24 per share on November 13, 2019.
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