Franklin Wireless Corp.
Lead Plaintiff Deadline: 06/15/2021
SUMMARY OF CASE:
A securities class action has been filed against Franklin Wireless Corp. (FKWL) on behalf of persons and entities that purchased or otherwise acquired Franklin Wireless securities between September 17, 2020 through April 8, 2021. This case has been filed in the USDC – S.D.CA.
The Complaint alleges that on April 1, 2021, Franklin stated that it “ha[d] been notified of reports of battery issues in some of its wireless hotspot device.” It also stated that the Company was “working with its battery and device manufacturing partners and carrier customer to determine the cause and extent of the problem.”
On this news, the Company’s share price fell $0.35, or 1.65%, to close at $20.77 per share on April 5, 2021, the next trading session, on unusually heavy trading volume.
On April 8, 2021, media reported that Verizon Wireless is recalling certain hotspot devices. According to CNBC, Verizon “is recalling 2.5 million hotspot devices after discovering that the lithium ion battery can overheat, creating a fire and burning hazard.” Moreover, the “recall impacts Ellipsis Jetpack mobile hotspots imported by Franklin Wireless Corp and sold between April 2017 and March 2021.”
On this news, the Company’s share price fell $2.82, or 14%, to close at $17.33 per share on April 8, 2021, on unusually heavy trading volume.
On April 9, 2021, Franklin stated that its customer Verizon Wireless “has issued a voluntary recall of its Jetpack Hotspot devices imported by Franklin.” The Company stated that “[a]t this time, fewer than 20 report of trouble have been received with over 2 million devices in [sic] sold over the last three and a half years.”
On this news, the Company’s share price fell $4.07, or nearly 23%, to close at $13.26 per share on April 9, 2021, on unusually heavy trading volume.
Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Franklin’s hotspot devices suffered from battery issues, including overheating, thereby presenting a fire hazard; (2) that, as a result, it was reasonably likely that the Company’s customers would recall Franklin’s devices; (3) that, as a result, Franklin would suffer reputational harm; and (4) that, 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.