Pomerantz Appointed Lead Counsel in Raytheon Securities Litigation
On November 17, 2021, U.S. District Judge John C. Hinderaker of the District of Arizona appointed Pomerantz LLP as Lead Counsel on behalf of the State Teachers Retirement System of Ohio, Lead Plaintiff in Bajjuri v. Raytheon Technologies Corporation, 20-cv-00468 (D. Ariz.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Raytheon Technologies Corporation (“Raytheon” or the “Company”) had made false and misleading statements regarding the effectiveness of Raytheon’s internal controls over financial reporting and disclosure controls and procedures, as well as a number of relevant financial metrics.
Raytheon purports to be an aerospace and defense company providing advanced systems and services for commercial, military, and government customers worldwide. Among the Company’s four main operational divisions is its Raytheon Missiles and Defense segment, which designs, develops, integrates, and produces missile and combat systems for the armed forces of the United States and allied nations.
Allegations against Raytheon include that: (i) the Company’s internal controls over financial reporting and disclosure controls and procedures were not effective and did not provide reasonable assurances that transactions were properly executed and/or recorded; (ii) Raytheon was not entitled to the benefits of the revenue it generated from its government contracts due to the misuse, misappropriation, and violations of the prescribed protocols and parameters of those government contracts; (iii) the Company’s material overstatement of reported revenues resulted in the improper reporting of other important financial metrics, like operating income, operating margin, income from operations and net income; and (iv) as a result, the misconduct subjected Raytheon to significant fines and other punitive remedies, in addition to future bars from government contracts.
The truth emerged on October 27, 2020, when Raytheon announced its third-quarter 2020 financial results in which it revealed that it was the subject of a criminal investigation by the Department of Justice (“DOJ”), stating “On October 8, 2020, the Company received a criminal subpoena from the DOJ seeking information and documents in connection with an investigation relating to financial accounting, internal controls over financial reporting, and cost reporting regarding Raytheon Company’s Missiles & Defense business since 2009. We are cooperating fully with the DOJ’s investigation. At this time, the Company is unable to predict the outcome of the investigation. Based on the information available to date, however, we do not believe the results of this inquiry will have a material adverse effect on our financial condition, results of operations or liquidity.”
On this news, Raytheon’s share price fell $4.19 per share, or approximately 7%, to close at $52.34 per share on October 28, 2020.