Lawsuit Claims Zebra Technologies Hid Internal Issues, Deceived Investors

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Zebra Technologies Corporation and two executives are on the receiving end of a proposed class action lawsuit that claims they filed misleading statements regarding the company’s finances and understated the “material weaknesses” they had inherited in an acquisition. The complaint details several reports filed in 2015, noting that Zebra admitted it was facing issues with its internal financial reporting and disclosure processes while it assured investors that its recent acquisition of Motorola’s Enterprise business was generating “positive momentum.”

According to the lawsuit, subsequent financial reports – which reflected negative results – indicated to investors that the issues still remained while, at the same time, insisting that a restatement of previous reports was not necessary. The plaintiff claims Zebra stock declined sharply after each quarterly release.

Finally, in November 2016, the defendants allegedly admitted that the Motorola acquisition had caused significant internal control issues that resulted in the company’s understatement of its 2015 income taxes. Consequently, Zebra was forced to issue a restatement of its financial reports from 2015 and the first two quarters of 2016, contradicting its previous assurances that no restatements would be necessary, the suit says.

According to the complaint, the defendants artificially inflated Zebra stock prices with deceptive financial statements and harmed investors when the truth of Zebra’s internal issues “seeped into the market,” causing stock prices to decline a total of 56%.