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IMAX might have hurts investors by overstating revenues by including revenue from inactive movie theaters in its financial statements.
Investigation Source (Case #06-cv-06128)
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Investments
- False And Misleading Statements
Product or Service
- Common Stock
Injury Type
- Monetary Loss
Investigation Details
This is a securities fraud class action lawsuit against IMAX Corporation alleging that IMAX made a series of material misrepresentations to investors.
IMAX provided sound systems to movie theaters. In February and March 2006, IMAX issued press releases touting IMAX's financial success, and indicated IMAX's willingness to explore financial options. A press release issued as late as May 9, 2006 continued to mislead investors concerning IMAX's true financial condition. IMAX only came clean to investors after the SEC began an investigation into how IMAX recognized revenues from inactive movie theaters.
After these announcements the price of IMAX shares crashed, falling by 40.6%, or $3.91 on the following trading day. IMAX and its top executives knew that revenue was being improperly recognized, but failed to make the necessary adjustments, thus artificially inflating the stock.
IMAX provided sound systems to movie theaters. In February and March 2006, IMAX issued press releases touting IMAX's financial success, and indicated IMAX's willingness to explore financial options. A press release issued as late as May 9, 2006 continued to mislead investors concerning IMAX's true financial condition. IMAX only came clean to investors after the SEC began an investigation into how IMAX recognized revenues from inactive movie theaters.
After these announcements the price of IMAX shares crashed, falling by 40.6%, or $3.91 on the following trading day. IMAX and its top executives knew that revenue was being improperly recognized, but failed to make the necessary adjustments, thus artificially inflating the stock.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| IMAX Corporation (IMAX) | IMAX Corporation, together with its subsidiaries, specializes in motion picture technologies and large-format film presentations. It engages in the design, manufacture, sale, and lease of large-format digital and film-based theater systems. |