StoneMor Partners, L.P., Directors Facing Securities Fraud Class Action

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A class action has been filed against StoneMore Partners, L.P. and members of its board of directors over alleged Securities Exchange Act violations stemming from a scheme to purport inaccurate information to shareholders. According to the 47-page lawsuit, the defendants provided materially misleading statements to shareholders regarding the company’s financial performance. These statements reportedly relied “heavily on opportune accounting metrics” that undermined the company’s true audited business numbers to create the illusion to shareholders that StoneMor was a profitable business generating significant cashflow.

The lawsuit describes the information shared by the defendants as being based on a “financial shell game” that aimed to raise fresh capital from investors “just in time to distribute a portion of it back to investors” and operators of the illegal scheme. According to the complaint, the defendant “has never in any year generated sufficient cash flow from operations” to meet the company’s distribution obligations to investors.