b'First Circuit Cases to WatchLuna v. Carbonite, Inc., Case No. 20-2110Miller v. Sonus Networks, Inc., Case No. (1st Circuit)1:18-cv-12344 (D. Mass.) Discontinuance Of New Service Change In Revenue Forecasting MethodologyAs discussed above, Carbonite is a software company that provides cloud-based backup services. In OctoberSonus Networks, Inc. (Sonus) provides communication 2018, Carbonite announced the launch of its Serversolutions that allow businesses to secure their Backup VM Edition (VME) for managed servicescommunications infrastructures. In 2014, Sonus providers, which it touted as the culmination of onechanged its revenue forecasting methodology of our largest cross-functional efforts, led by ourwhereas the company had previously used an exceptional engineering organization, and projectedemployees commit number, a more conservative that it would add meaningfully to Carbonites revenueestimate of total sales by an employee, for its revenue for fiscal year 2019. This did not go as expectedestimates, Sonus elected to use an employees stretch and, in August 2019, investors filed putative classnumber, an aspirational figure, in its estimates. Sonus action lawsuits against Carbonite, its CEO, and CFOused those stretch numbers in its forecast for the first alleging violations of Sections 10(b) and 20(a) of thequarter of 2015 and projected $74 million in revenue for 1934 Act and Rule 10b-5 promulgated thereunder.that quarter during an October 2014 earnings call. Plaintiffs amended consolidated complaint allegedIn March 2015, Sonus released its first quarter 2015 that defendants knew or should have known that theirresults, announcing $50 million in revenue, missing its projections of VMEs value and statements aboutestimate by $24 million. Consequently, the companys VMEs performance were materially misleading, andstock price fell by 33%. In October 2017, Sonus merged that defendants failed to disclose that VME was ofwith GENBAND US LLC, each becoming a wholly poor quality and technologically flawed, received poorown subsidiary of Sonus Networks, Inc., and Sonus reviews from customers, and had been a disruptivebegan doing business under the name of Ribbon factor for the companys salesforce, preventingCommunications, LLC (Ribbon). Carbonite from closing on several deals during 2019. Although on October 22, 2020, the court dismissed theIn August 2018, the SEC disclosed an administrative operative complaint, with prejudice, the case is likelyproceeding and that it had issued an order instituting to remain active. Plaintiffs appealed the decision to thecease-and-desist proceedings pursuant to Section U.S. Court of Appeals for the First Circuit, and filed their8A of the 1933 Act and Section 21C of the 1934 Act. opening brief on March 2, 2021.The cease-and-desist order stated that the SEC had charged Ribbon, a vice president of sales, and its CFO with making negligent misstatements in 2015 92'