Ex-employees say Sunrun hid cancellations around IPO - report
Image by Twitter, @Sunrun
US residential solar firm Sunrun (NASDAQ:RUN) withheld customer cancellation numbers ahead of its initial public offering (IPO) in August 2015, former managers told the Wall Street Journal (WSJ).
The daily cited Darren Jennings, a former regional sales manager in Hawaii with the company, as saying that at the time of the IPO the company sought to boost sales figures and instructed sales managers not to report cancelled deals. In his region, cancellations accounted for roughly 40% of total bookings in May-October 2015, but sales people did not report the negative numbers.
Other former managers told the WSJ they knew of or participated in the delaying of reporting of customer cancellations.
On May 3 the WSJ reported that the inadequate disclosure of customer cancellation numbers in the US residential solar sector is the subject of a Securities and Exchange Commission (SEC) probe. It mentioned Sunrun and Tesla’s SolarCity (NASDAQ:SCTY) as two companies being investigated.
Sunrun started trading on the Nasdaq on August 5, raising USD 250.6 million (EUR 223m) before over-allotments. The IPO was priced at USD 14 per share, while the highest level the firm's stock has reached in the past 52 weeks was of just USD 7.34 apiece. The stock price fell below USD 5 after the WSJ report on the SEC probe.
A class action lawsuit was filed this month against the company on behalf of a class consisting of investors who acquired Sunrun securities between September 16, 2015 and May 2, 2017. The class complaint alleges that during the class period the defendants made false and/or misleading statements and/or failed to disclose that Sunrun did not adequately report the number of customers that have canceled contracts, and that discovery of the foregoing conduct would subject the company to heightened regulatory scrutiny and potential civil sanctions.