A class action lawsuit was filed against HireRight Holdings Corp. (NYSE:HRT) on April 1, 2024. The plaintiffs (shareholders) alleged that they bought HRT stock pursuant and/or traceable to the offering documents (as defined in the complaint) issued in connection with HireRight’s initial public offering (IPO) conducted in October 2021 and are now seeking compensation for their financial losses. Investors who bought HRT stock during that period can click here to learn about joining the lawsuit.
HireRight is a global provider of technology-driven workforce risk management and compliance solutions. HRT provides comprehensive background screening, verification, identification, monitoring, and drug and health screening services for more than 37,000 customers worldwide.
The plaintiffs maintain that HireRight Holdings and ten of its senior officers and/or directors who reviewed, contributed to, and signed or caused the signing of the Registration Statement deceived investors by negligently preparing the offering documents. Importantly, the offering documents included untrue statements and/or failed to disclose information about HireRight’s revenue growth and its exposure to customers with substantial employment and hiring risk.
The situation became clear on January 19, 2023, when brokerage and investment banking firm Stifel downgraded HRT stock. Notably, Seeking Alpha reported that Stifel found HireRight to be exposed to large technology firms facing more acute employment and hiring risk. It added that more of the company’s growth comes from existing client hiring than from new clients.
In contrast, HireRight stated in its offering documents that it caters to businesses of all sizes, from large to small, and also serves different industries, including transportation, healthcare, technology, business and consumer services, financial services, manufacturing, education, retail, and not-for-profit. HRT also stated that it aimed to increase order size from existing customers while tapping customers in new markets.
As per the class action lawsuit, HireRight caused its stock to trade at artificially inflated prices by knowingly and recklessly misleading investors about the company’s business prospects and practices in the offering documents.
Notably, HRT stock has lost 16.9% since its IPO in October 2021, causing damage to shareholders’ returns. The stock has been wildly volatile during this period.
