Covisint, the IT company that was originally set up in 2000 as a parts exchange platform by a consortium of carmakers, has had a federal securities fraud class action filed against it for an alleged violation of the Securities Exchange Act (1993).
Today Covisint provides a cloud platform designed to connect communities of customers, business partners, and suppliers for the automotive, healthcare, energy, travel, financial services, life sciences, and consumer goods industries.
According to the complaint, announced by shareholder rights law firm Robbins Arroyo this week, shares of Covisint had declined 46% as of May 30 this year, since the company's initial public offering September 26, 2013. It is alleged that when the registration statement in connection with the IPO was filed Covisint knew and failed to disclose a number of impinging factors, including a decline in service revenue from one of its automotive customers.
Amongst the other problems it is alleged to have been experiencing at the time was a greater than expected decline in its subscription revenue due to poor sales. On top of this it is alleged Covisint was facing increased competition in its services segment as customers were not adding services at a rate consistent with expectations. The company was also losing healthcare customers at an increasing rate and its pipeline of healthcare related deals was declining according to the complaint.