NEW YORK, May 11, 2017 (GLOBE NEWSWIRE) -- Labaton Sucharow LLP (“Labaton Sucharow”) announces that on May 10, 2017, it filed a securities class action lawsuit on behalf of its client City of Warwick Municipal Employees Pension Fund (“Warwick”) against Rackspace Hosting, Inc. (“Rackspace” or the “Company”) (NYSE:RAX), and certain of its senior executives (collectively, “Defendants”). The action, which is captioned City of Warwick Municipal Employees Pension Fund v. Rackspace Hosting, Inc., No. 17-cv-03501 (S.D.N.Y.), asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and U.S. Securities and Exchange Commission (“SEC”) Rule 10b-5 promulgated thereunder, on behalf of all investors who purchased or otherwise acquired Rackspace common stock between November 11, 2014 and August 10, 2015, inclusive (the “Class Period”).
The Complaint alleges that during the Class Period, Defendants violated provisions of the Exchange Act by issuing false and misleading statements regarding the impending loss of its contract with Vodafone Group Plc (“Vodafone”) and the attendant impact on the Company’s profitability and growth prospects. Rackspace is a cloud computing company that provides data hosting and other related services to business customers around the world. In August 2010, Rackspace announced that its Vodafone Contract had been renewed for an additional five years.
During the Class Period, Rackspace repeatedly touted the profitability and growth of its international business. However, Defendants’ Class Period statements pertaining to the Company’s profitability and growth prospects were materially false and misleading because Defendants failed to disclose that: (1) Vodafone had initiated extensive data migration away from Rackspace servers, signaling Vodafone’s intent to replace Rackspace with alternative providers on the contract’s April 1, 2015 expiration date; (2) the failure to secure a renewal of the Vodafone Contract would have a significant near-term financial impact on the Company’s 2015 recurring revenues; and (3) as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company and its growth prospects.
Beginning in May 2015, a series of disclosures exposed the non-renewal of the Vodafone Contract and its concomitant impact on the Company’s financial performance and business prospects. In reaction to these revelations, Rackspace stock lost hundreds of millions of dollars in market capitalization, with the Company’s stock price falling from a Class Period high of nearly $56 per share on April 27, 2015, to close at $29.24 per share on August 11, 2015.
If you purchased or acquired the publicly traded common stock of Rackspace during the Class Period, you are a member of the “Class” and may be able to seek appointment as Lead Plaintiff. Lead Plaintiff motion papers must be filed with the U.S. District Court for the Southern District of New York no later than July 10, 2017. The Lead Plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as Lead Plaintiff to share in any Class recovery in this action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member. You may retain counsel of your choice to represent you in this action.
If you would like to consider serving as Lead Plaintiff or have any questions about this lawsuit, you may contact Francis P. McConville, Esq. of Labaton Sucharow, at (800) 321-0476, or via email at fmcconville@labaton.com. You can view a copy of the complaint online at http://www.labaton.com/en/cases/City-of-Warwick-Municipal-Employees-Pension-Fund-v-Rackspace-Hosting-Inc.cfm.
Warwick is represented by Labaton Sucharow, which represents many of the largest pension funds in the United States and internationally with combined assets under management of more than $2 trillion. Labaton Sucharow’s litigation reputation is built on its half-century of securities litigation experience, more than 60 full-time attorneys, and in-house team of investigators, financial analysts, and forensic accountants. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY and Wilmington, DE. More information about Labaton Sucharow is available at www.labaton.com.