Question
review everything related to Dunder from the past few years to see if the investors may have any recourse against the company. summarizing any securities
review everything related to Dunder from the past few years to see if the investors may have any recourse against the company. summarizing any securities law issues that you see.
It is February 2019. Michael Scott is the CEO of Dunder Dunder Inc., an up-and-coming office supplies company that provides professional workspaces with all the paper, pens, pencils, folders and organizing systems that are needed to satisfy their workforces. Over the past six years, the staff has grown to nearly 500 people and numerous clients. Michael wants to keep the company on its fast-paced-growth path, and believes the time is right to take his closely held company public so that he can raise the funds needed to build state-of-the-art headquarters and make the necessary investments in his staff to keep things pointing only up. While an office supplies expert, Michael knows nearly nothing about how to take a company public. For that, he turns to his top deputy, Dwight Schrute, a man of many talents. Dwight mentions that his cousin, Mose, works at the biggest bank in town, Best Local Bank, and that they handled the IPOs for a number of companies the last few years. Michael meets with the bankers that very day and leaves the meeting so excited that he feels compelled to tweet on the company's Twitter account "Big News Coming! I thought our 2018 was strong but 2019 is going to be our best year yet!" and included a link to the company's just completed 2018 financial statements. Because he was so excited coming out of the meeting, Michael was disappointed to learn that it would take some time before he could become the owner of a publicly traded company. Over the next few weeks, Best Local Bank added another bank (Second Best Bank, who does spotlights on various industries and had featured the office supplies industry in 2018 and included a mention of Dunder as a hot company) as a co-managing underwriter. Together, they drafted the registration statement filed it with the SEC in late April 2019. Michael, however, was worried that all this time spent waiting was dulling the interest in Dunder. Dwight decided that he would step up to the plate to do something about it. Dwight designed a robocalling app to call all listed phone numbers in the area with a pre-recorded message touting how great a company Dunder was, how the office and office supply business has never been stronger and that the company was on the brink of a high-demand public offering. The SEC approved the registration statement in mid-May 2019, and the company IPOed on the NYSE on May 22 at a price of $12 per share and sold all 10 million desired shares. In early February 2020, Michael held an investor call, reassuring his biggest stakeholders that there would always be a need for professional offices and stating that Dunder was recession proof. After the call ended, Michael called up his accountant, who was in the process of finishing up the 2019 financial statements, and pressured him to get them finished by the next day so that he could reassure his investors just how great the company was. The next day, Dunder filed its 10-K and tweeted a link out to it as well. However, come March as several cities had to start shutting down due to the health concerns, the accountant realized that he had overstated 2019 revenues by $100 million, forgetting to include a decimal point where one should have been. Michael, in his own haste, had not even read the final 2019 numbers before signing it. But with how hectic March was, Michael forgot to ever publicize the error or amend the 10-K. It is now late 2020, and Dunder has not had the year that Michael had hoped. Its office supplies business ground to a halt as everyone started to work from home. He had to lay off half his 3 workforce and was worried he needed to lay off more. Further, the stock price has dropped from its $12 IPO price now down to $2. A number of investors are furious and feel like someone needs to be blamed for all the money they have lost.
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