Investors accuse the AI-powered construction equipment firm of failing to disclose related-party transactions that allegedly benefited companies linked to EquipmentShare’s founders to the tune of $77 million.
MANHATTAN (CN) – AI-driven construction technology and equipment rental company EquipmentShare uses a network of more than 100 family and related entities to reap tens of millions of dollars in profits through undisclosed self-dealing, investors allege in a filing. class action filed in New York federal court.
Led by class representative Jupiter Parra, the investor class claims EquipmentShare shares fell 11.7% to close at $19.69 on June 25, a day after Umibōzu research published a report accusing the company’s leadership of self-dealing and misleading the market regarding its business model.
The report — titled “EquipmentShare: Ruthless Self-Dealing, a Tech Veneer and the Missouri ‘Cult’ That Started It All” — suggested the company’s finances would not survive SEC and IRS scrutiny, citing a former insider who allegedly named one of EquipmentShareon’s affiliates.
Represented by attorney Rebecca Dawson, of Glancy Prongay, the class seeks recovery of investor losses and unspecified damages arising from the company’s material misrepresentations and omissions regarding related party transactions.
Filed in the U.S. District Court for the Southern District of New York on Thursday evening, the class action consists of four counts of federal securities law violations against the Missouri-based company itself and its individual directors and officers, including CEO and co-founder Jabbok Schlacks and CFO David Marquardt.
Investors accuse the company’s board of directors of knowingly concealing ongoing equipment sales and lease transactions with entities owned by the company’s co-founders. Those deals netted at least $77 million for companies associated with the EquipmentShare co-founders, investors say.
“Because of their positions and access to material nonpublic information available to them, the individual defendants knew that the adverse facts specified herein had not been disclosed to them and were being concealed from the public and that the positive representations then being made were materially false and/or misleading,” the investors wrote in the complaint.
Investors say they bought securities at artificially inflated prices, noting the company’s shares opened to the public at a price of $24.50 initial public offering that earned EquipmentShare about $706 million.
Parra bought more than 100 shares of EquipmentShare stock in February at a unit price of $32.55. He believes the class of affected investors could consist of “at least hundreds or thousands of members.”
Representatives for EquipmentShare did not immediately respond to a request for comment Friday morning.
As of Friday, the company’s stock price, traded on NASDAQ as EQPT, settled at about $19.24.
Earlier in July, EquipmentShare released an updated financial forecast that raised the company’s rental segment revenue growth outlook from 29% to 33%, citing “continued customer demand, stable fleet utilization, disciplined execution and better-than-expected financial performance during the first half of the year.”
Subscribe to our free newsletters
Our weekly newsletter Closing arguments provides the latest on ongoing trials, major litigation and decisions in courts around the US and the world, while monthly Under the lights feeds legal dirt from Hollywood, sports, Big Tech and the arts.
