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On Mar. 25, 2024, Equinix disclosed announced that the Audit Committee of the company’s Board of Directors has commenced an independent investigation to review the matters referenced in a recent short seller report. Equinix further disclosed that after the release of the report, the company received a subpoena from the U.S. Attorney’s Office for the Northern District of California.

The short seller report in question was issued by Hindenburg Research on Mar. 20, 2024, alleging that Equinix’s senior management was manipulating key financial metrics to boost the appearance of profitability and trigger executive stock grants.

Hindenburg’s report, entitled “Equinix Exposed: Major Accounting Manipulation, Core Business Decay And Selling An AI Pipedream As Insiders Cashed Out Hundreds of Millions,” is based in part on interviews with 37 former Equinix employees and a forensic review of the company’s financial statements.

Significantly, Hindenburg’s forensic review concludes that:

(1) Equinix inflates its adjusted funds from operations (“AFFO”), the key profitability metric for REITs, by at least 22% during 2023 alone;

(2) “[a] key accounting trick to boost AFFO is to misclassify ‘maintenance CapEx’ as ‘growth CapEx,’ giving the appearance that the company’s cost to maintain its revenue base is lower than it actually is, making the company appear more profitable[;]”

(3) “[w]hen Equinix transitioned to become a REIT in 2015, it began using AFFO as a key metric in determining executive bonuses[;]”

(4) “[d]uring our investigation, former employees and executives provided an array of examples of obvious maintenance CapEx being classified as growth CapEx in order to boost reported AFFO[]” and “[t]his manipulative practice stems from top management[;]” and

(5) “[w]e estimate that Equinix’s manipulation of maintenance CapEx has resulted in a cumulative $3 billion boost to AFFO since its 2015 conversion to REIT status.”

Hindenburg observes that Equinix’s questionable AFFO accounting has substantially contributed to $295.8 million in stock award grants to top executives. Hindenburg further contends that “Equinix positions itself as a way to play AI, but former executives confirmed the rise of AI and machine learning workloads will strain power capacity” because, according to a former executive “‘every single site in the estate is oversold by 25%.’”

Lastly, Hindenburg notes “[n]one of these issues seem lost on management and insiders, who have been awarded compensation based on manipulated AFFO metrics and have cashed out $476 million since the company’s conversion to REIT status, including over $100 million since 2023.”

In response to these events, the price of Equinix shares has fallen $52.06, or down over 6%, since Mar. 19, 2024.


What is the EQIX investigation about?

We are investigating whether Equinix may have inflated key financial metrics to appear more profitable.


I worked at EQIX. What should I do?

If you were an employee of EQIX, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.


What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.


Am I affected? What do I need to do to participate?

If you were an investor in EQIX, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any EQIX investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.

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