Ex-Latch Sales Director Sues Latch and CEO
A former Latch sales director filed an investor class action suit against the company, alleging that Latch misrepresented "nearly every key business metric" in its lead-up to a June 2021 SPAC merger that took the company public.
Last year, IPVM reported that ex-Latch employees alleged Latch manipulated and inflated bookings. And last month, Latch's CEO was forced out, among investigations into those issues.
In this report, IPVM examines the allegations in the latest lawsuit, how they compare with what Latch has so far reported, and the outlook for the company in light of its mounting legal and financial problems.
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*** *******, ***** ***. **, **** — *** **** ********** *** **** ************ ******** ********,***** **** *** ******* *** *** chief ********** ******* — **** **** an ********************* **** *** *******'* ********, ******* *** *******, *** *********** of"******* *********** ******."
*****-**** ***************** * **** ******** **** **** alleged ********* ********* ******** ** *** company **** **** ***** *** ** far *********, ********* ******** ****** **** booking ******* *** ********** ******** *********.
Revenue ******* ******
**** ******** ** ****** ******** *** ******* "******* ******* ** intent, ********* *** ************ ********." **** was *** **** ** ********* *** magnitude ** *** ********* ** ************ at *** ****, *** * ********** of *** *******'* "******" ****** ********* revenue **** *** ****** *** ******** the ****** *** ***********.
** *** ****, **** ***** ***** started ******** ********** *** ******, ** reported *** ** $*.* ******* *** the *** ** ** ****. ** contrast, ***** ****** *****, ** ******** "Total ****** ***" ** $**.* *******, or ****** *** *** ****** ***. The ******* ******** *** **** ***** business ********* ***** ** *** ****** ARR.
*********,** ** ******** *****,* ***** ***** ********* **********:
******* *********** ****** ******** ** * result ** ********** ***** ************ *** to ***** ******** **** *** ************ with *** *******'* ******** ******** *** procedures.
** ******** *** ******, *** ********* ******** **** *** problems **** **** ** *** ** 2019.
More ******** ***********
****** **** ** ********* ****** *******, the ****** ******** ******* ***** **** detailed *********** ***** ******** ******* ******* practices ** ***** **** **** ********** been *********.
** **********, ***** *********** ** *** pre-merger ************ ********* **** *** *** of ******* ** ****** "***** ** multi-year ******** *********, ****** ******** ***** with *** ********* *** ***** *********, local *** ******** ****** ********, *** a **** ******* ** *** ****-******** demands ** ******** *********."
*** ******* **** ******* **** "**** typically ******* ****** * ** ** months ** *******, ********* ** ************ timeline," *** "*****" ********* ******* ** intent ** * **** ******, ********* to *** *********. *** ********* ******* that *** ****** ********** **** *** "as *** ** **-**%."
******* ** ****** **** *** *** include ********* *** ****** *************, ***** hovered ****** **% ** ******** ****, according ** *** *********.
******* ** *** **** ** *** basis *** *****'* ***** **** **** artificially ******** ***** ******* ** ********* the ******* ** *********.
********** ******** ***** *** *** ********** *** ****.
******** ***** ******* **** **** ********* and ********, *** ********* *******. ***** said ** *** ************ ********* **** revenue *** ********** "**** ******** ** control ** ******** ***** ** ******** to ********* ** * *********** *****."
*******, ** ***** ** **** ***** quotas, *** ******* ***** **** ******** products ****** *****, "** ********* *** did *** *** **** ****, ****** for *** **** ** *********** *******," according ** *** *********.
** *****, ***** ********* ***** ** to ********** ******* ** ******* ******* contacts, *** ***** ***** **** ** their ***** ** *******. ***, **** information *** ******, *** ********* ***** sometimes ****** *** ******** ***** *** quarter's ***.
Retrofit *************
***** **** ******* ** ******** **** factors ********** **** *** ******* ******* practices, *****'* ***-****** ************ ********* ************** sales ********* *** ********* *************, ********* to *** *********.
*** ***** *** ************ ***** ********* with ***** *******. ** *** ************ statement, ***** **** ** ******** *** share ** *** ******** ****** **** "retrofit *************" ** "******** *************" **** the ****** ****.
*******, ***** ********* "***** ********* ***** structural ****** **** ***** ******* ***** device ************* **** ***** ************ ********," the ********* *******. ******** **** ************* in ***** ********* *** **** * "key *****" *** ********** ******* ** intent ** ****** *****, ********* ** the *********.
***** *** ** ******* ** *** Pre-Merger ************ ********* ***** *** **** of ***** ****** ************* *** ***** feasible ** ***** *********.
Smart **** ******
***** **** *********** ****** ** *** registration ********* ** ***** "**** ********** to **** ********* ** *** ****** in *** ***** **** ******" *** said *** "********** *******...****** *** *********** customer ********* ******* ****-**** *********, ***** generate **** *******, ****-**** ********* ******** revenues."
*** *** *******'* ***** **** ********** "lacked * ***** ** ******* *** did *** ********," *** ********* *******.
***** ********* ** "****" ** ** the ****, *** ***** **** ** clients ** ***** ** ********** *** it.
International *************
***** "**********" *** ************* ******** *** potential ** ****** **** ************* ******* as ****, ********* ** *** *********. The ************ ********* **** *** ******* operated ** *** *.*. *** ******, and *** "****-********** ** ***** *** geographic ******* **** ** ******" **** the ******* ** *** **** ******* Tishman ****** *** ******* *********.
*** *****'* ******** ** ****** *** "extremely *******, ** **** *** ********** partnership," ********* ** *** *********.
*** ** ***** *******, ****** ***** not *** *** ** *** ********, and ******* *** ************ **** *** bilingual (** **** ******* *** ******) they ***** *** ******* ** **** in ******* *********, ********* ******.
******* *** ******** *** *** ********* in ***** *********, *** ******* *** not "****-**********" ** ****** ** ***** markets, *** ********* *******. ** *** it *** "*** ******** **** *** additional ************* ******* *** ** *** present ** ******," ********* ** *** complaint.
** ******* ***** ************** *** *****, Kelly **********, ******** ** ******* ** the *******.
Suit ***** ** ******* *******
*** ****** *******, ***** ***** ** represent * ***** ** ***-****** "******" investors, ** ******* ******* ** *** filed ** * ****** ******* *******.
******** *********, ***** ********, *** * ***** ******** ** Latch *** ******* ** ** ********** account ********* ** ******** **** *** rose ** *** ******** ** ***** director *** *** **** ****** ** October ****, ********* ***** ******** *******. ** **** *** ******* ** August ****, ********* ** *** *******.
Additional ***** ****** ****
***** ** **** ****** ******* ******** class ******,***** ** ************* *** ******* ***** **** ************, the *******'* ****** ******** ********, *** *** *******'* ****** ******* CFO***** *********. **** ******* ******* ********* *** purchased ****** ******* *** **, **** and ***. **, **** **** ****** by ****************** ***** *** *******'* ********* reporting.****** ** *** ************* ****** $** ** *** **** when *** **** **** ******. *** price *** **** ******** ****** $* since **** ****.
Tishman ****** ****
********'* ******* **** ******* **** *** August ***** ****** ** **** ** asserts ****** ******* ********* ** *** SPAC ***** ****** **** ** **** as ************* ******, *** ********* *** *** ** SPAC ************** ******, * ************ ****** **** ****** investment ****.
*****'* ****** **** ******* ******'* ** Innovations ************ ****. *** ********* ** January ****.*** **** ****** ***** ** $*.** *******. In *** *********, ******** ******* **** he ********* ******* *** ******** ***** stock ** ***** **, ****.
************, ********'* **** ******* ********* ***** claims. *** ****** ******* ***** ****** of "*****" ***** *** *** ********** and ******** *** ** ****. ********'* complaint ******* ****** ***** ******** ** and ** ** ************* *** ** ****, ***** ****** ** ********* *** misrepresentations *** *** "*****" ** "*********** or ******** **********."
Latch ***********
*** ******* *** **** ******** *********** about *** ***** *** ******* *********** errors, ******* **** ****** ***** ** ***. 17, ****. ** **** ******, *** ******* reported **** *** ************* *** "************* complete. ********** *** *** ***** ********* also '********* *** *********** ******* ** address *** ****** *** ****** ********** by *** *************, ********* ********* *******, changes ** ******** ******** *** ************ to ********** ********* *** ********.'"
********* ** *** ************ ** ******* CEO ***** ***** *** ******* *** Marc *****, ** ************* *********** ************, the ******* ****:
*** ******** ********* ******* ***** ********* and ***** ********* ******** *** ******* the *******'* ******* ** ***** *** findings ** *** ************* ** *** remediation *** *********** *******.
** *** *** *******'* ********* **********, the ***** ******** **** ********** *** 2021, *** *** ***** ******* ** 2022, *** *** ************ ********** *** 2019 *** **** "****** ** ****** be ****** **** ** * ****** of ******** ******* ************ *** ****** relating ** *** ****** ** ***** the ******* ********** *******. ************ ********* statements *** ******** ******* **** ** restated."
*** ********** ****** ** ***** *******, registration **********, ***** **********, ************, ***** releases, ******** ********, ******** ************* ** other **************...******** *** ******** ******* ****** no ****** ** ****** ****.
*******
***** *** ************** *** ******* **%, *** ********** ******* *** **** ***************** ** **%. ************,**** ******** ******* ** *********** *** ******* **** *** * security ************* ********** ****** ******** **** employees ********** ***** **** ** **** lawsuits.
*** ****** ******** **** **** ** a ******* **** ** *********** *** the *******, *** ***** ***** *** a ~$*** ******* **** ************ ******* $*** ************** *** ****, ***** ***** **** it ******* **** *********.
*** = ***
** ****** **** **** *** **** entirely *******. *** **** * ******* go ****** ******* ******* **** **** be * *******? *** *** ********* not ***** *****?
***, **** * **** *** *****.
**'* ****** ***********. **** ** ***** technology *** ***** ***** *****. *****, not ** ****.
******* *******, ****** **** *** **** the ****** ***** ***** ** ****** of *** *******:
*** **-**** ****** * "******** *********** ********** *********" that ******* *** ********* **:
* *********** (***********) ********** **** ** a************** ** ************** ***** ** ************ ** ****** of ********************* *** ***********’* *********, ********, ** other ***** ******* *** ****** ***** duties.The ***** ** *** **** ** not ******** *** ******* ** *** corporation
******: **** ******* *** **** ***** to *** *** **********:*** ******* ***** ******* ***** / Executives
* ** ********** ** *** *** this ***** *** - **** ** this **** *** *** *******'* ******* investigation.
**** *** * ***** *** ** build * ******** ** *** ***** conflating **** **** *******. **** *** really ****** ** ****'* ** * pipeline **** **** ******** *** ******.