A class action lawsuit accuses Millennial Media executives of hiding information that reflected poorly on the company, and, once released publicly, sent the company's stock price tumbling.
The Mississippi state pension system's complaint, filed in federal court in New York last week, accuses the Baltimore mobile advertising firm and its leaders of making "false and misleading statements" and failing to disclose material information that investors should have known. Two New York law firms filed the lawsuit on the pension's behalf, and are seeking more Millennial stockholders as plaintiffs.
Millennial Media sold $152 million in what was considered a successful initial public stock offering in March 2012, but shares have since lost more than 90 percent of their value. Shares closed at $1.92 each Monday.
Millennial officials said they do not comment on litigation.
The law firms allege the company withheld information on the development and functionality of key technology, the benefits of some corporate acquisitions and the outlook for the company's future performance. But when that information came to light, Millennial's stock price plummeted. After a May conference call that revealed mounting losses and the departure of the company's chief financial officer, shares fell 40 percent in a day.
"The true state of Millennial Media's technology, acquisitions, and outlook was revealed through a series of disclosures that included revelations of disappointing financial results and guidance, additional corporate acquisitions, and the resignation of its Chief Financial Officer, Michael B. Avon to 'pursue other career interests,'" the law firms Labaton Sucharow LLP and Bernstein Litowitz Berger & Grossmann LLP said in a statement.
Millennial has grown from a startup founded in 2006 in Baltimore's Emerging Technology Center to take over most of the Can Company development in Canton, which is being renamed the Millennial Media Center at the Can Company.