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Net 1 UEPS Technologies, Inc. Class Action Lawsuit

Case Summary

Company Name
Net 1 UEPS Technologies, Inc.
Stock Symbol
UEPS
Class Period
September 12, 2018 to November 8, 2018
Court
Southern District of New York

On December 5, 2019, the Net 1 UEPS Technologies, Inc. class action lawsuit was filed charging Net 1 UEPS Technologies (“Net 1 UEPS”) and certain of its officers with violations of the Securities Exchange Act of 1934.  The Net 1 UEPS class action lawsuit was commenced in the Southern District of New York on behalf of purchasers of Net 1 UEPS securities between September 12, 2018 and November 8, 2018 (the “Class Period”) and is captioned Baldwin v. Net 1 UEPS Technologies, Inc., et al., No. 19-cv-11174.

Net 1 UEPS provides transaction processing services, financial inclusion products and services, and payment and cryptographic technology.  Net 1 UEPS’s principal platform is the Universal Electronic Payment System, which uses decentralized and biometrically secure smart cards.  In addition, Net 1 UEPS offers telecommunication products such as prepaid airtime on behalf of all network operators in South Africa and owns 55% of the largest distributor of starter packs for the third largest network, Cell C (Pty) Ltd. (“Cell C”).

The Net 1 UEPS class action lawsuit alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Net 1 UEPS’s business and operations.  Specifically, defendants failed to disclose that Net 1 UEPS lacked effective internal control over financial reporting and, as a consequence, Net 1 UEPS had misclassified its investment in Cell C and its financial statements for fiscal year 2018 overstated its income.  As a result of this information being withheld from the market, Net 1 UEPS securities traded at artificially inflated prices during the Class Period, with Net 1 UEPS’s stock trading at more than $8 per share.

Then on November 8, 2018, after the market closed, Net 1 UEPS announced that its Audit Committee had concluded that “the Company’s consolidated financial statements for the year ended June 30, 2018 . . . should be restated, and that such consolidated financial statements . . . should no longer be relied upon, due to the Company’s re-evaluation of the classification of its investment in Cell C.”  According to Net 1 UEPS, although Net 1 UEPS “elected the fair value option on acquisition of its investment in Cell C . . . the investment was incorrectly presented as available-for-sale and the change in its fair value of $25.2 million . . . was incorrectly recorded in other comprehensive income for the year ended June 30, 2018.  The investment in Cell C should have been accounted for at fair value with changes in fair value recorded in the statement of operations.”  On this news, the price of Net 1 UEPS shares declined $2.16 per share, or more than 30%, to close at $4.84 per share on November 9, 2018.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

Class Period: September 12, 2018 - November 8, 2018
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