GRABAR LAW OFFICE INVESTIGATES POTENTIAL SHAREHOLDER DERIVATIVE ACTION ON BEHALF OF CURRENT SHAREHOLDERS OF GOGO, INC. (NASDAQ: GOGO)
A securities suit against Gogo Inc. and several of its executives has survived a motion to dismiss. Plaintiff sufficiently pleaded his Securities Exchange Act claims accusing the defendants of making false and misleading public statements about the reliability of Gogo’s in-flight internet connectivity services and its impact on Gogo’s financial outlook.
The Northern District of Illinois opinion explained that Gogo reportedly installed “2Ku” in-flight Wi-Fi systems on partner airplanes, although the defendants had knowledge that the systems would not work following the application of de-icing fluid to those planes. Former employees alleged that the company found out about the issue during the winter of 2016-17 and tracked service outages, according to the suit. The complaint alleged that the defendants concealed the seriousness of the defect and made false promises about the company’s prospects. Reportedly, when Gogo made the belated de-icing disclosure in May 2018, the company’s artificially inflated stock price plunged, to the detriment of investors.
"The former-employee allegations, particularly the allegations of [Former Employee Number 1], show that the de-icing fluid issue had begun to manifest itself prior to the beginning of the class period," Judge Alonso wrote. "According to [Former Employee Number 1], a dozen planes — 12% of Gogo's 2Ku fleet, at that time — were experiencing problems. Such a high failure rate among 2Ku systems in the field would have been an extremely ominous sign, given the critical importance of the 2Ku product to Gogo's fortunes."
Gogo shareholders who have held shares of the Company’s stock since at least February 27, 2017 have standing to seek corporate reforms, the return of funds back to company coffers and potentially a court approved incentive award if appropriate.
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