Shareholders File Class Action Suit Against United Rentals
October 4, 2004 • The law firm of Schiffrin & Barroway, Bala Cynwyd, Pa., announced last week that a class action lawsuit was filed on behalf of all securities purchasers of United Rentals, Inc., Greenwich, Conn., from October 23, 2003, to August 30, 2004. The complaint alleges the company failed to disclose and misrepresented or disregarded adverse facts known to the defendants, which include United Rentals, Wayland Hicks, Bradley Jacobs, John Milne, and Joseph Sherk.
Specifically, the lawsuit claims that:
- In an effort to generate a more favorable stock price and raise capital, the company manipulated its financial results through the use of restructuring charges, asset writedowns, and debt refinancing;
- The company improperly delayed recognition of bad accounts receivable;
- As a result of these manipulations, United Rentals' announced financial results were in violation of Generally Accepted Accounting Principles (GAAP); and
- The company's financial results were materially inflated at all relevant times.
On August 30, 2004, United Rentals announced it had received notice that the SEC was conducting a non-public, fact-finding inquiry of the company. The notice was accompanied by a subpoena requesting the production of documents relating to certain of the Company's accounting records. News of this shocked the market, and United Rentals' shares fell $4.39 per share, or 21.53 percent, closing at $16.00 per share on August 30, 2004.
