According to the Complaint, Conduent was formed effective December 31, 2016 from a collection of businesses within the Xerox Corporation. Conduent was spun-off to Xerox shareholders in a ratio of one Conduent share for every five Xerox shares owned. Conduent’s primary business is to run operations for clients, such as toll-booth collections.
Throughout 2017, Conduent and its two most senior officers repeatedly represented that Conduent was going through a one-year transformation and would exit as a unified business with a cohesive information technology.
On February 21, 2018, the beginning of the Class Period, defendants represented to shareholders on a conference call that it had “made impressive progress towards transforming our company in almost every dimension, with every function and unit contributing in some way.” Defendants repeated those representations in press releases and conference calls throughout 2018. These representations led to a two-day stock price increase of $2.29 per share (or 14.3%), on February 21-22, 2018.
The Complaint alleges the truth was revealed on November 7, 2018, when defendants acknowledged that Conduent had suffered reduced third quarter and projected fourth quarter operating results caused by “continued suboptimal performance from an inherited legacy technology vendor. The performance issue stem[s] from the vendor’s inability to deliver on service level agreements, lack of responsiveness to Conduent’s needs, and poorly structured contract which we inherited” and that an “outdated and historically under-invested legacy IT infrastructure has caused major disruptions to our operations and impacted clients and delivery performance.” These true facts caused Conduent common stock to tumble $5.60 per share to $13.62, or down 29.1% on very heavy volume.
On July 15, 2019, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on September 13. Defendants filed a Motion to Dismiss the amended Complaint on November 12. On June 5, 2020, the Court issued an Order denying Defendants' Motion to Dismiss.