Hagens Berman Investigation Yields Details In Allegations Against TeleNav
Hagens Berman Sobol Shapiro LLP has uncovered new details in its investigation into allegations that TeleNav Inc. (Nasdaq:TNAV) filed a false and misleading registration statement in connection with the company’s May 13 initial public offering.
Sunnyvale, Calif.-based TeleNav, a provider of wireless location-based services, filed with the U.S. Securities and Exchange Commission to sell 7 million shares of its common stock at $8 per share in an IPO. The registration statement showed that 55 percent of TeleNav’s business came from wireless carrier Sprint Nextel Corp. and that the contract with Sprint was not due to expire until December 2011.
Less than three months after its IPO, TeleNav revealed that it was already in “active negotiations” with Sprint to amend material terms of its contract with the wireless carrier. On July 30, TeleNav’s stock price plunged on the news, eventually closing at $5.44 per share, a one-day decline of 39 percent.
“Our investigation has resulted in specific allegations that TeleNav knew prior to its IPO that Sprint was complaining about devoting resources to the TeleNav navigation product and would not pre-load it onto Sprint’s Android phones,” said Hagens Berman partner Reed Kathrein. “Sources indicate that TeleNav was told that it would pre-load Google’s free service instead and that TeleNav could sell their service through their new Sprint Zone application. If proven true, these allegations could help us prove our case and win recovery for plaintiffs who invested in TeleNav based on what we believe was a misleading registration statement.”Hagens Berman attorneys believe that TeleNav was required by securities law to disclose the deterioration of the relationship with Sprint, and that the threat of Google’s competition had already occurred. In turn, TeleNav knew that negotiations would be tough, and likely to result in reduced revenues. “We intend to continue investigating claims that many within TeleNav knew that Sprint reportedly rejected TeleNav’s wireless location-based service for phones running on the Android operating system in favor of a competing technology from Google just a few months prior to TeleNav’s IPO,” Kathrein said.
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