On March 31, 2021, before markets opened, Jehoshaphat Research published a report alleging that Amdocs Limited (“Amdocs” or the “Company”) overstated its profits, evidenced by steady parent profits despite declining subsidiary profits. The report also noted there was a concerning pattern of reputable auditors resigning, only to be replaced by “scandal-plagued or tiny shops.” Furthermore, the report alleged that the Company “window-dressed” its balance sheets to keep its large borrowing a secret, and former employees and direct competitors corroborated the findings, including a former American Amdocs executive, who stated, “The US business was declining at a rate of [around] 7% annually . . . but then we would see the company [publish results that] say North America is stable.”
On this news, Amdocs’ stock price fell $9.19 per share, or 11.58%, to close at on March 30, 2021 to open at $70.15 on March 31, 2021.
The Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose to investors that: (1) the Company had overstated its profits, cash, and liquidity, while understating its debt; (2) the Company had concealed its large borrowing; (3) while the Company’s reported results showed that its North American business was stable, that business was actually deteriorating annually, in part because the Company was losing AT&T as a customer; and (4) as a result, the Company’s public statements were materially false and misleading at all relevant times.
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