Carvana Co. CVNA Class action lawsuit alleging securities fraud:

The lawsuit challenges the defendants’ statements touting Carvana’s growth in retail units sold, which is said to be driven by the company’s increased penetration in existing markets.

The lawsuit alleges that defendants’ statements were misleading because they failed to disclose that Carvana: (1) had serious ongoing problems with the documentation, registration and title of many of its vehicles; (2) issued temporary license plates with unusual frequency; (3) violated laws and regulations in many of its existing markets; (4) risked its ability to continue its business and/or expand its business in existing markets; (5) faced increased risk of governmental investigation and action; (6) Consulted with state and local authorities regarding the above business tactics and issues; and (7) faced pending and ongoing regulatory actions, including license suspensions, suspension of business and probation in multiple states.

On June 24, 2022, Barrons published an article revealing that “[i]In its rush to capture market share from competitors, Carvana was selling cars faster than it could let them to their new owners.” Carvana was selling cars before it had a title, and at one point Carvana tried to respond to these problems by while setting up the unit “Undriveable Auto Task Force”. Barrons also noted that Carvana is under scrutiny from several state motor vehicle agencies for failure to meet vehicle registration deadlines, customers’ use of third-country permits, and other compliance issues.

This news sent the price of Carvana shares down significantly.

“We are focused on investor losses and evidence that Carvana hid its rampant documentation violations,” said Reed Kathrein, the partner at Hagens Berman who led the investigation.

If you have invested in Carvana and…