KIT Digital Hit with Securities Fraud Class Action Lawsuit

KIT Digital Hit with Securities Fraud Class Action Lawsuit

By Christina Drury

Publicly traded companies are held to high standards in terms of their operational activities and must answer to several governing authorities – none more important than the Securities Exchange Commission (SEC). The Securities Exchange Commission is responsible for ensuring that the company uses fair practices in their accounting and reporting methods so as to protect the many investors who may purchase the stock on any given day. A recent securities fraud class action lawsuit has been brought against KIT Digital when several revenue recognition errors were reported that may have inflated the company’s operational revenue.

KIT Digital admitted to fling inaccurate quarterly filings on November 21, 2012 in an 8-K form filed with the SEC. Many mistakes were made in the accounting process, namely in terms of revenue recognition dealing with software license agreements. As a result there is an ongoing investigation by Faruqi & Faruqi, LLP to determine whether Kit Digital and its executives were responsible for violating securities law by not disclosing that they were filing false financial statements with the SEC.

False Financial Statements Filed for Years

The 8-K filed by KIT Digital admits that there were errors dating back to 2009. The financial statements for both year-end as well each of the remaining quarters in 2009, 2010, and 2011 will end up being restated as a result of the errors made in the accounting procedures. Additionally the quarters ending March 31, 2012 as well as June 30, 2012 are going to be restated as well. The quarterly report that is due for the period ending September 30, 2012 is not going to be filed in a timely manner as KIT Digital and its executives work on restating the prior years. No earnings release is slated nor are officials expecting to hold their slated earnings conference call.

As a result of the discrepancies in the accounting methods and revenue recognition, the stock (symbol: KITD) traded at prices that were artificially inflated and investors were subject to enormous losses.

Lead Plaintiff Sought in KIT Digital Securities Class Action Lawsuit

Class action lawsuits rely on a lead plaintiff to lead the rest of the plaintiffs in a class action lawsuit. As of right now, there is no lead plaintiff in the securities fraud lawsuit against KIT Digital and those who are wishing to seek the position of lead plaintiff can file with the court no later than January 29, 2013. It should be noted that the lead plaintiff should have experienced a loss that is in excess of $100,000 in order to qualify.

How to Qualify for Compensation

Investment losses due to SEC violations are typically available for compensation due to the damages that occur. If you or anyone you know has purchased stock in KIT Digital during the class period which occurred May 19, 2009 through November 21, 2012, you are urged to contact the investigating firm or any qualified attorney to discuss your specific details. Those who purchased the stock at inflated prices may be eligible for compensation due to their loss on investment.

Were you a victim of stock fraud, securities fraud or investment fraud? You may have a case to file class action lawsuit against the parties responsible. Visit the Securities Fraud, Stock Fraud Investment Class Action Lawsuit Investigation for details.

Updated December 26th, 2012

All securities fraud class action and lawsuit news updates are listed in the Stocks & Securities section of Top Class Actions