MIDDLETOWN, R.I. – KVH Industries (Nasdaq: KVHI), a manufacturer of satellite communications products for the marine and RV markets, is facing a class action suit for allegedly issuing false statements about its TracVision satellite TV systems.
Participating in the suit, which was filed in the United States District Court of Rhode Island, are Schatz & Nobel, P.C., Hartford, Conn., the Law Offices of Charles J. Piven, P.A., Baltimore, Md., and the Law Offices of Brian M. Felgoise, P.C., Philadelphia, Penn. All claim that the class action has been filed “on behalf of shareholders who acquired KVH Industries, Inc. securities between Jan. 6, 2004 and July 2, 2004.
All three also make the same basic accusation, that the defendants, which include the company and “certain key officers and directors,” broke federal securities laws by issuing false and misleading statements that artificially inflated the market price of the company’s securities.
Schatz& Nobel P.C. stated in a press release Friday that the defendants also failed to disclose that “KVH had stuffed the retail channels with overpriced TracVision systems; revenues were not growing by million of dollars per quarter and the purported growth trends in KVH’s revenues could not be sustained; and KVH had not realized any material cost reduction in the manufacture of its TracVision systems and would be forced to write-down its inventory of manufactured goods by millions of dollars.”
In fact, the law firm claimed that by concealing those facts, KVH was able to raise more than $51.5 million through a public offering of common stock.
Once KVH revealed that it was lowering the price of its TracVision systems by more than 34 percent and taking a multi-million dollar write-down of vendor purchase commitments and on-hand inventories, its stock declined by more than 19 percent in one day, a 49-percent decline from the public offering price, Schatz & Nobel O.C. alleged.