Updated: Aug 10
AI, BNED, TSP, HPE, SIX, CDLX, BILL
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Filings from the week of June 21 - June 28.
C3.ai Inc (AI) dealt with extremely high management turnover: three CFOs since December 2021. The company and its management were sued for alleged breach of fiduciary duties and gross mismanagement, among other things. Barnes & Noble Education Inc. (BNED) identified misstatements in its previous SEC filings in the past year, resulting in an additional net loss of $8 million.
Top Red Flags
BARNES & NOBLE EDUCATION INC (BNED) | 8-K | $155M - BNED identified misstatements in its financial statements for the fiscal year ended May 1, 2021, quarter ended July 31, 2021, and quarter ended October 30,2021, related to income tax benefits. The company decided to restate its financial statements, resulting in an additional net loss of $8 million for its fiscal year 2021.
TUSIMPLE HOLDINGS INC (TSP) | 8-K | $1.8B - TSP announced the resignation of its CFO, Patrick Dillon, effective July 7, 2022. The company had reported ineffective controls back in its fiscal year 2020 annual report.
SIX FLAGS ENTERTAINMENT CORP (SIX) | 8-K | $2B - SIX’s Controller and Principal Accounting Officer, Justin Hunt, resigned from his role, effective July 15, 2022. Six Flags had also lost its CFO, Sandeep Reddy, back in March 2022.
CARDLYTICS INC (CDLX) | 8-K | $825M - CDLX’s Chief Legal and Privacy Officer, Kirk Somers, notified the Company of his resignation, effective July 15, 2022. The company had reported ineffective controls in its most recent quarterly filing.
HEWLETT PACKARD ENTERPRISE CO (HPE) | 8-K | $17.9B - HPE announced the resignation of its Controller and Principal Accounting Officer, Jeff T. Ricci effective July 1, 2022. Mr. Ricci will transition to a different role: Strategic Initiative Leader for Finance & Strategy.
C3AI INC (AI)
10-K | Market Cap: $1.9B
C3.ai Inc (AI), an enterprise artificial intelligence software company, reported that a securities class action lawsuit was filed against the company and several of its officers and directors for allegedly making material misstatements in connection with its IPO back in late 2020. 
Furthermore, a shareholder derivative lawsuit was filed against AI and its officers and directors for breach of fiduciary duty, gross mismanagement, and unjust enrichment. 
It’s not a surprise that gross mismanagement was a major claim against the company because it had three different CFO’s since December 2021.
David Barter was AI’s CFO starting in October 2020. He resigned from his role in December 2021.  Adeel Manzoor would take David Barter’s place. Nevertheless, after only three months Adeel Manzoor resigned from C3.ai on February 28, 2022.  This was only a few days before the company was sued. The third CFO in this small time frame became Juho Parkkinen. Quite the turnover!
"On March 4, 2022, a putative securities class action complaint (captioned The Reckstin Family Trust v. C3.ai, Inc. et al., 22-cv-01413-HSG) was filed in the U.S. District Court for the Northern District of California against us, and certain current and former officers and directors. The complaint generally alleges that the defendants made material misstatements or omissions about our partnership with Baker Hughes and other strategic alliances, our market potential, and the uptake of our products. The complaint alleges that defendants made these misstatements or omissions in connection with our IPO in violation of Sections 11 and 15 of the Securities Act of 1933 and between December 9, 2020 and February 15, 2022, inclusive, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934."
"Additionally, on May 23, 2022, a putative shareholder derivative action (captioned Suri v. Siebel et al., 22-cv-03031) was filed in the U.S. District Court for the Northern District of California. The plaintiff asserts claims on the Company’s behalf against certain of the Company’s officers and directors for breach of fiduciary duty, gross mismanagement, abuse of control, unjust enrichment, and contribution under the Securities Exchange Act of 1934 based on allegations similar to those in the securities class action. The Company is named as a nominal defendant."
Form 8-K filed March 2, 2022: "On November 27, 2021, David Barter resigned his position with the Company effective December 10, 2021. Mr. Barter will assist the Company with transition-related matters prior to his departure."
Form 8-K filed December 1, 2021: "On February 25, 2022, Adeel Manzoor resigned from his position with the Company effective February 28, 2022 (the "Separation Date")."
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