The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Latch, Inc. (“Latch” or the “Company”) (NASDAQ: LTCH) securities from May 13, 2021 through August 25, 2022, both dates inclusive (the “Class Period”). Investors have until October 31, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Latch is a technology company that specializes in keyless entry security systems to open and manage doors in apartment buildings from a smartphone.
On August 25, 2022, in a Form 8-K filed with the SEC, Latch announced a material financial accounting restatement. The Company cited material errors and possible irregularities relating to, among other things, the way it recognized revenue associated with the sale of hardware devices since listing its shares on NASDAQ. Specifically, Latch noted that the “Audit Committee has determined the statements for 2021 and 1Q 2022 will be restated” and “based on the preliminary findings of the Investigation, certain revenue recognition errors occurred as a result of unreported sales arrangements due to sales activity that was inconsistent with the Company’s internal controls and procedures.” On this news, the price of Latch shares declined by $0.14 per share, or approximately 12.96%, from $1.08 per share to close at $0.94 on August 26, 2022.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) there were unreported sales arrangements related to hardware devices; (2) as a result, the Company had improperly recognized revenue throughout fiscal 2021 and first quarter 2022; (3) there were material weaknesses in Latch’s internal control over financial reporting related to revenue recognition; (4) as a result of the foregoing, Latch would restate financial statements for fiscal 2021 and first quarter 2022; and (5) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.