Clarivate investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than March 25, 2022 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired Clarivate Plc (“Clarivate”) (NYSE: CLVT; CLVT PR A) ordinary shares between November 10, 2020 and February 2, 2022, both dates inclusive (the “Class Period”).
Case Background
Clarivate is an analytics and information services company that provides subscription and technology-based services that purportedly help customers accelerate the discovery, protection, and commercialization of their inventions in the areas of science and intellectual property. On October 1, 2020, Clarivate acquired 100% of the assets, liabilities, and equity interests of CPA Global, an intellectual property software and technology-enabled services company, in a cash and stock transaction valued at more than $8 billion (the “CPA Global Transaction”).
The Class Period commences on November 10, 2020, when Clarivate filed a Form 8-K in advance of its annual Investor Day conference to be held later that day, providing its initial full year financial guidance for 2021 that reflected the CPA Global Transaction. Before and after its acquisition of CPA Global, Clarivate assured investors of the core effectiveness of its financial controls and procedures.
The truth began to emerged on December 27, 2021, when Clarivate filed a current report on a Form 8-K, disclosing its need to restate the 2020 10-K, the first quarter 2021 10-Q, second quarter 2021 10-Q, and third quarter 2021 10-Q. In the Form 8-K, Clarivate stated, “the financial statements previously issued as of and for the year ended December 31, 2020, and the quarterly periods ended March 31, 2021, June 30, 2021, and September 30, 2021, should no longer be relied upon because of an error in such financial statements,” and that “[t]he error relates to . . . an equity plan included in the CPA Global business combination which was consummated on October 1, 2020.” The Form 8-K specified that “[i]n the affected financial statements, certain awards made by CPA Global under its equity plan were incorrectly included as part of the acquisition accounting for the CPA Global Transaction.”
Later, on December 27, 2021, an hour before market trading hours closed, StreetInsider.com published an article on Clarivate entitled “Clarivate Plc (CLVT) PT Lowered to $29 at Stifel on Accounting Error.” The article referenced Clarivate’s discovery of the accounting error related to equity awards that CPA Global had issued under its equity plan, and stated, “[t]he timing of this discovery is poor, less than a month after the prior CFO left.”
Following this news, Clarivate’s ordinary share price fell $0.16 per share, or 0.65%, to close at $24.58 per share on December 27, 2021. As the market continued to digest the information, Clarivate’s ordinary share price fell an additional $1.70 per share, or 6.92%, to close at $22.88 per share on December 28, 2021—a total decline of $1.86 per share, or 7.52%, over two consecutive trading days.
Then, on February 3, 2022, Clarivate filed restated financials for the year ended December 31, 2020 and the three quarters ended March 31, June 30, and September 30, 2021. Clarivate confirmed that the restated financial information affected its previously reported “GAAP income (loss) from operations, benefit (provision) for income taxes, net income (loss), earnings (loss) per share, current and non-current assets, current and non-current liabilities, and shareholders’ equity.” Specifically, as a result of its improper accounting, for the year ended December 31, 2020 and the nine months ended September 31, 2021, Clarivate overstated its pre-tax earnings by more than $121 million over those periods.
Following this news, Clarivate’s ordinary share price declined by $2.90 per share, or approximately 16.4%, from a closing price of $17.71 per share on February 2, 2022, to a closing price of $14.81 per share on February 3, 2022.
The complaint alleges that throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that: (1) Clarivate maintained defective disclosure controls and procedures as a result of a material weakness in its internal control over financial reporting; (2) the foregoing material weakness was not limited to how Clarivate accounted for warrants; (3) as a result, Clarivate failed to properly account for an equity plan included in its acquisition of CPA Global; (4) accordingly, Clarivate was reasonably likely to restate one or more of its previously issued financial statements following its acquisition of CPA Global; and (5) as a result, Clarivate’s public statements were materially false and misleading at all relevant times.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.