The Law Offices of Howard G. Smith, representing investors of Hansen Medical, has filed a class action lawsuit against the medical robotics developer in U.S. District Court for the Northern District of California on behalf of a class consisting of all persons or entities who purchased the securities of Hansen between May 1, 2008, and Oct. 18, 2009.
The complaint charges the Irvine, Calif.-based company and some of its “executive officers” with violations of federal securities laws. The complaint alleges that defendants “knew or recklessly disregarded” that their public statements concerning Hansen’s business, operations and prospects were materially false and misleading.
Last week, Hansen reissued its financial results over that time period due to potential errors in recorded revenues from sales of its Sensei robotic catheter system.
Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (1) the company improperly recognized revenue; (2) as a result, the company’s revenue and financial results were overstated during the 15-month period; (3) the company’s financial results were not prepared in accordance with generally-accepted accounting principles; (4) the company lacked adequate internal and financial controls; and (5), as a result of the above, the company's financial statements were materially false and misleading at all relevant times.
On Oct. 19, Hansen reportedly revealed that the audit committee of its board of directors, upon the recommendation of management, concluded that the company’s previously issued financial statements contained in its annual report on Form 10-K for the year ended Dec. 31, 2008, and its quarterly reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008, Sept. 30, 2008, March 31, 2009, and June 30, 2009, should no longer be relied upon because of errors arising from “potential irregularities outside of the accounting department.”
According to the company, Hansen identified systems for which revenue should have been recognized in a later period than the period in which it was recognized, and revenue on systems that should have been reflected as deferred revenue on its balance sheet as of June 30, 2009. As a result of this news, the law offices said that the price of Hansen shares declined $0.31 per share, more than 9 percent, to close on Oct. 19, at $3.12 per share.