Roadrunner Transportation Systems Inc. has agreed to pay $20 million to settle a class action lawsuit alleging the company misled investors through inaccurate securities filings.
The deal offers those who bought shares of Roadrunner Transportation stock on the open market from March 14, 2013 to January 30, 2018 around 45 cents per share. After deductions for fees and expenses the average net recovery is expected to be around 37 cents per share.
The Downers Grove, Illinois-based logistics company said in early 2018 that increasing complexity brought on by a series of acquisitions and a lack of internal controls led it to overstate its profits by $66.5 million from 2011 through the third quarter of 2016. The company was based in Cudahy until mid-2017.
Three former company executives, including former CFO Peter Armbruster, have since been criminally charged in federal court for their role in an alleged scheme to cover up issues with the company’s accounting. The trio also faces civil charges from the Securities and Exchange Commission.
The Public Employees Retirement System of Mississippi leads the class action lawsuit. It was filed in early 2017 after Roadrunner Transportation announced it had discovered issues with its accounting and would need to restate its results.
Roadrunner Transportation and the other defendants in the case continue to deny they knowingly made false statements or have any liability for any wrongdoing, nonetheless they have agreed to the settlement.
The plaintiffs also contend they could have won out had the case proceeded, but also noted the pending criminal case is “wasting insurance coverage and corporate assets.” The plaintiffs also say moving forward with the litigation would be expensive and the settlement is fair given it represented around 86% of Roadrunner’s market capitalization when the deal was reached in principle.
A federal judge still needs to sign off on the preliminary settlement before the class can be finalized and distribution can begin.
