Class Action Litigation by Lieff Cabraser Heimann & Bernstein Vs. Marvell

The law firm of Lieff Cabraser Heimann & Bernstein, LLP announces that class action litigation has been brought on behalf of investors who purchased or otherwise acquired the securities of Marvell Technology Group, Inc. between November 20, 2014 through September 10, 2015, inclusive.

The actions charge Marvell and certain of its senior executives with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Marvell, headquartered in Bermuda, is a fabless semiconductor company that ships over one billion chips a year.

The actions allege that during the class period, defendants made false and/or misleading statements and/or failed to disclose that:

• Marvell had engaged in inappropriate revenue recognition practices;
• the company’s senior management encouraged a closed and ineffective control environment;
• the company’s key accounting metrics were misstated;
• that the company lacked adequate internal controls;
• and that, as a result of the foregoing, defendants’ statements about Marvell’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.

On September 11, 2015, Marvell reported a quarterly loss of $382.4 million for its second quarter of fiscal 2016, whereas analysts on average had predicted a quarterly profit of $11.9 million. The company also announced an internal probe by its audit committee into “certain revenue recognition issues in the second quarter of fiscal 2016 and any associated issues with whether senior management’s operating style during the period resulted in an open flow of information and communication to set an appropriate tone for an effective control environment.”

According to the company, the audit committee’s investigation was focused on the approximately 7-8% of revenue recognized in the second quarter of fiscal 2016 that, based upon the original customer request date, would have been received and earned in the third quarter of fiscal 2016 and is now no longer available for receipt in that quarter. The company explained that the increase was indicative of softening demand for certain products, especially the storage end market.

On this news, the price of Marvell common stock fell $1.71 per share, or 16.21%, from a closing price of $10.55 on September 10, 2015, to close at $8.84 per share on September 11, 2015, on extraordinarily high volume.