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Rubicon Technology (RBCN) Securities Fraud Class Action Lawsuit

Rubicon Securities fraud

This case asks a basic question:  Did Rubicon intentionally keep bad news from investors so a large shareholder (controlled by a director) could sell over $30 million in common stock at a secondary offering in March 2014 at an inflated value?

What investors are part of this class action?   This case (as currently pled) covers all shareholders that purchased Rubicon’s stock traceable to the secondary offering held in March 2015.  Generally that means you may be part of the class if you purchased Rubicon stock between March 19, 2014 and April 30 2015.  Rubicon Technology, Inc.  common stock trades under the symbol RBCN.

Procedural Status.  The lawsuit was filed on April 30, 2015 and is captioned Firerock Global Opportunity Fund LP v. Rubicon Technology, Inc. et al.  It was filed in the Illinois Northern District Court. Its civil docket number is 1:15cv03813.  The lead plaintiff deadline is June 29, 2015.                                                                     

On December 6, 2013, Rubicon filed with the SEC an amended shelf registration statement authorizing Rubicon and to-be-identified “selling stockholders” to sell up to $100,000,000 worth of shares of Rubicon common stock. 

On March 19, 2014, Rubicon filed with the SEC a prospectus supplement offering to register for sale at $13.00 per share 2.5 million shares of Rubicon common stock (not including an over-allotment of 375,000 shares) by selling shareholder Cross Atlantic Funds (a group of funds controlled by one of Rubicon’s directors). 

The Registration Statement became effective on March 19, 2014 when there were only 12 days left in the first quarter of 2014.

The complaint alleges that the Registration Statement contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. 

Specifically, the Registration Statement negligently failed to disclose:

  • material trends, events and uncertainties known to management that were reasonably expected to have a material impact on Rubicon’s income from continuing operations;
  • that Rubicon shrinking operating losses would not continue at the stated trend;
  • Rubicon was experiencing higher-than-expected development costs; and
  • Rubicon would need to write-off inventory s due to its inability to sell certain of its wafers during its 2014 first quarter at prices greater than their cost to manufacture, causing such inventory to be impaired under applicable accounting rules and regulations. 

On May 1, 2014, Rubicon issued a press release and hosted a conference call regarding its first quarter of 2014. Rubicon reported disappointing financial results and revealed, among other things, that the trend of shrinking gross losses, operating losses, and losses per share from the prior quarters had dramatically reversed in the first quarter of 2014, reporting substantial increases in gross losses of $7.5 million, losses from operations of $10.9 million, and losses per share of $0.43. 

After the earnings call on May 1, 2014, the price of Rubicon common stock declined by 16%, from about $10 per share to $8.51 per share, and declined another almost 6% to $8.01 per share on May 5, 2014. 


Current Case Status: 
This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a 60 day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this 60 day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in March and update this page as warranted.
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