U.S. law firm Wolf Haldenstein Adler Freeman & Herz has revealed it is investigating claims on behalf of a number of shareholders of tech firm Equinix for potentially violating U.S. securities laws.
The New York City-based preeminent national shareholder rights litigation firm confirmed to QA Financial that “the focus of the investigation is to whether the company issued false and/or misleading statements and/or did not disclose information pertinent to investors.”
Equinix, the multinational tech company that is headquartered in Redwood City, California, specialises in data centres but is increasingly active in the QA testing space, offering a range of solutions that deploy and test distributed IT networks via its Equinix Solution Validation offering.
Damning report
Equinix, which has been lead by CEO Charles Meyers since 2018, is the subject of a report released by Hindenburg Research that was published on March 20, titled: “Equinix Exposed: Major Accounting Manipulation, Core Business Decay and Selling an AI Pipe Dream As Insiders Cashed Out Hundreds of Millions.”
According to the report, Hindenburg’s investigation, which included a review of financial and litigation records and interviews with 37 former Equinix employees, industry experts and competitors, revealed that Equinix “manipulates” its accounting for AFFO [adjusted funds from operations], the key profitability metric for REITs.
“We estimate this metric was overstated by at least 22% in 2023 alone,” the researchers claimed.
Share price
Following the report, shares dropped from a close of $844.58 per share on March 19 down to a closing price of $824.88 on March 20. The stock continued down on subsequent trading days.
Last week, on March 25, Equinix announced that its internal Audit Committee had launched an independent investigation in relation to the allegations in the short seller report and disclosed receipts of a subpoena from the U.S. Attorney’s Office for the Northern District of California.
Equinix did not refute any allegations made in the report. On this news, the company’s stock price continued its multi-day decline, closing at $792.52 on March 25.
Wolf Haldenstein, which has experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the U.S., declined to discuss the case in further detail.
When approached by QA Financial, no one at Equinix was available to respond.
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