MiMedx Executives Under Investigation for Potential Breaches of Fiduciary Duty
Schubert Jonckheer & Kolbe is investigating whether certain directors and officers of MiMedx Group, Inc., a biopharmaceutical company, breached their fiduciary duties by causing the Company to engage in accounting manipulation and issue false and misleading statements to shareholders and the market.
In February 2018, a class action complaint was filed against the Company alleging that between March 7, 2013 and February 19, 2018, MiMedx was engaged in a “channel-stuffing” scheme designed to improperly recognize revenue, and that the Company lacked adequate internal controls over financial reporting. According to the complaint, in December 2016, two former MiMedx employees filed a complaint against the company alleging that MiMedx fired them for reporting fraudulent revenue recognition practices. The employees alleged that MiMedx inappropriately recorded sales of products that had not yet been filled in order to fraudulently recognize revenue in its financial statements before the revenue had been realized.
On June 7, 2018, MiMedx announced that it would restate its financial statements for fiscal years 2012, 2013, 2014, 2015, and 2016, along with its interim financial statements released in March, June, and September 2017. The Company also disclosed that all financial information for the fourth quarter of 2017 and first quarter of 2018 could no longer be relied upon, and withdrew its guidance for fiscal year 2018. MiMedx also disclosed that its Chief Financial Officer and Corporate Controller had left their roles with the Company.
On July 2, 2018, the Company announced that Parker H. Petit resigned as Chairman and Chief Executive Officer, and that William C. Taylor resigned as President, Chief Operating Officer and as a director. On July 26, 2018, the Company received a delisting notice from NASDAQ.
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