American Education Technology Company ‘Chegg’ Facing Shareholder Lawsuit
According to a report from Forbes, Chegg, an American education technology with a primary headquarters in Silicon Valley, is facing a class action shareholder lawsuit. A group of shareholders contend that they suffered significant financial losses due to material misrepresentations made by the company officers and directors. Within this blog post, our West Palm Beach shareholder dispute lawyers discuss the shareholder lawsuit filed against the education technology company Chegg.
Allegations: Corporate Leaders Made False Statements and Material Misrepresentations
In early September of 2021, the stock price for Chegg (CHGG) was just over $86.00 per share. Within 10 weeks, it hit a multi-year low of $24.25 per share. The steep fall in the share price came after the company released disappointing financial information. Soon after, a group of shareholders filed a class action lawsuit. Here are three key things to know about this shareholder lawsuit:
- Failure to Make Projections With Reasonable Basis: Chegg saw a major spike in its revenue (and share price) in March of 2020. As the COVID-19 pandemic saw the closure of schools around the world, Chegg’s education technology services were increasingly in demand. However, the plaintiffs in the shareholder lawsuit contend that Chegg’s corporate leaders made future projections without a reasonable basis using temporary numbers from the initial stages of the pandemic.
- Student Cheating an Issue on the Platform: Over the last 20 months, Chegg has been wrapped up in a number of different student cheating scandals. Indeed, student cheating has been a serious issue on the platform. The plaintiffs in the shareholder lawsuit contend that the company’s leaders not only failed to properly address the cheating, but temporarily benefited from it all while putting the company’s long-term financial health in jeopardy.
- Business Not as Strong as Represented to Class Members: At the core of the shareholder lawsuit is a simple argument: Class members contend that Chegg’s business is simply not as strong as it was represented. They allege that real financial harm was sustained because corporate officers and directors made false statements and material misrepresentations regarding the current and future business prospects of the company.
For its part, the defendants have declined to provide a public comment on the class action shareholder lawsuit citing a policy on pending litigation. The shareholder claim is currently pending in the United States District Court for the Northern District of California. The relevant period cited in the class action claim is May 2020 through November 2021.
Contact Our Florida Shareholder Dispute Attorney Today
At Pike & Lustig, LLP, our shareholder rights lawyers are standing by, ready to protect your rights. If you are a shareholder who has sustained losses due to the improper conduct of corporate officers/directors, we can help. Get in touch with us today for a private review and evaluation of your case. Our law firm advocates for shareholders throughout South Florida, including in West Palm Beach, Jupiter, Palm Beach Gardens, Fort Lauderdale, Boca Raton, Miami, and Miami Beach.