Plaintiff Electrical Workers Pension Fund, Local 103, I.B.E.W. has filed a class action complaint against HP Inc. for securities violations. The complaint was filed in the California Northern District Court. The Electrical Workers Pension Fund is represented by Kessler Topaz Meltzer and Check. The purported class encompasses anyone who purchased HP common stock between February 23, 2017 and October 3, 2019. The complaint alleged that HP and its senior officials violated the Securities Exchange Act of 1934. The plaintiffs argued that HP violated the Exchange Act by deceiving the investing public and causing class members to purchase HP stock at inflated prices.
In 2017, HP reworked its supply business, making a one-time purchase of $450 million to buy back supplies and to realign inventory with demand. The company assured investors that the new strategy would be effective and that it would use its “four-box” model to assess effectiveness. However, according to Plaintiffs, this was not the case; HP lacked a means to accurately assess if its new strategy was working. The plaintiff stated that “HP’s common stock traded at artificially inflated prices.” The allegedly inflated valuation came to light in February 2019, when HP reported lower revenue than anticipated. HP stock prices declined multiple times as a result. HP would go on to again change its revenue model; it also let go of up to 16 percent of its workforce globally.
The Electrical Workers Pension Fund stated that HP’s misleading and inflated stock prices have hurt investors. While after the first quarter of the 2017 fiscal year, the company grew overall, its supplies business was declining. The plaintiffs argued that the company should have known this decline would affect their numbers overall, due to the importance of the supplies business to HP.
The plaintiff stated that “[i]n truth, Defendants knew that the four-box model was severely deficient and not a strong predictor of Supplies demand and outcomes.” In 2019, when HP’s revenue was lower than expected HP immediately declared it was because of weak demand, however, HP allegedly admitted that in its model “it had been using incorrect Supplies market share assumptions.” The plaintiffs purported that HP misled investors about its model’s accuracy and ability to predict demand, resulting in an inflated valuation and later loss in revenue.
The Electrical Workers Pension Fund has sought compensation for damages, an equitable or injunctive relief, as well as other forms of relief.