Boston, MA 09/23/2014 (wallstreetpr) – 21Vianet Group Inc (NASDAQ:VNET) is witnessing challenges due to the misrepresentation of the Company’s business and financials. Recently, the Company faced securities class action lawsuit from Wolf Haldenstein Adler Freeman & Herz LLP. Wolf Haldenstein prosecuted against the Company on behalf of investors during the class period (April 21, 2011 to September 10, 2014).
The law firm’s allegation will have some significance as Wolf Haldenstein primarily involves in derivative litigation and securities class actions and well recognized by both state and federal courts for such litigation. As a result of the news, 21Vianet Group Inc (NASDAQ:VNET)’s share price declined by $1.76 per share.
Burning issue
The Complaint alleged that the Company provided false information related to its business, performance, compliance and misleading the investors on their future prospects. During the period, the Company failed to disclose the complete information such as it overstated the internet data center network’s cabinet numbers, misrepresented the financial of its managed network, termination of its outsourced data centers and misleading the financial statements.
Even, on September 10, 2014, research firm like Trinity Research Group published a report on 21Vianet as “A Ponzi Scheme of Acquisitions: 21Vianet Group Inc (NASDAQ:VNET) Exposed.” According to the report, 21Vianet provided false data on its IDC network assets and their performance, misrepresented the financial information including revenue generation from their acquired companies and also on the business units. Few of its units are well known for their illegal business in Chinese IDC circles.
21Vianet’s claims
21Vianet Group Inc (NASDAQ:VNET), however, defended that the claims against the Company are baseless attack to damage the reputation as well as its business. 21Vianet’s Co-Founder and CEO, Josh Chen said that the Company is doing the internet infrastructure business for last 15 years and providing all the information related to its data centers and their utilization rates. He also said that the Company follows the SEC guidelines in reporting and presenting the detail financial information.
