Active Network (ACTV -7.1%) is down sharply after boutique litigation firm Bronstein, Gewirtz & Grossman announces an investigation into whether the company and its executive officers violated federal securities laws in statements regarding customer conversions to its online registration systems.
The cloud event management platform's stock was buoyed to 52-week highs ($11.25) after it reported "expressions of interest ranging from an investment ... to an acquisition" by outside parties at the beginning of the month. Thus, today's move could be due to profit-taking.
Skepticism over the company's reporting is not rearing its head for the first time. In February, SA contributor Prescience Point argued that management had masked the company's weakening financial condition by "gaming the accounting and reducing investor disclosures," and that Active Network had little to no appeal as an acquisition target given its "sprawling and complex organizational structure."