Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in InnerWorkings Inc. securities. According to recent reports, an investigation is underway to determine whether InnerWorkings and its executives committed federal securities violations and/or breached its fiduciary duty to shareholders.
On April 16, 2013, the Wall Street Journal reported that InnerWorkings projected its first-quarter 2013 results would fall below the expectations of analysts. It claimed a “significant reduction in scope of work at a large retail client” was the reason for cutting the expectations for 2013. Following the news, shares of InnerWorkings fell more than 20 percent in one day, from $14.03 per share to $10.50 per share on April 17, 2013. Furthermore, InnerWorkings now estimates per-share earnings to be 45-50 cents per share, as opposed to the previous forecast of 57-61 cents per share. Revenue projections have also decreased, from $930-$960 million to $900-$930 million.
According to investment fraud lawyers, investors became even more concerned on April 30, 2013, when a report was published by Prescience Point Research Group. The report alleges that InnerWorking shares are grossly overvalued as a result of revenue inflation committed by the company, and in violation of GAAP principles. Allegedly, InnerWorkings misapplied gross revenue accounting which, if true, would violate its credit agreement. The Securities and Exchange Commission had previously filed a letter on November 13, 2012 requesting that InnerWorkings’ service revenue recognition treatment and multiple element arrangement accounting treatment be clarified, according to securities fraud attorneys.