Equinix Must Face Investor Suit on Accounting Fraud Allegations

Equinix, Inc. will have to defend against accusations that the data center real estate investment trust misclassified recurring capital expenditures, misleading shareholders, a federal judge ordered.

There is potential to demonstrate that Equinix and executives defrauded investors knowingly in having inflated its adjusted funds from operation, Judge Vince Chhabria said his the US District Court for the Northern District of California ruling on Monday.

Adjusted fund from operation, or AFFO, helps estimate a real estate investment trust’s value. A recurring capital expenditure decreases AFFO while a non-recurring one wouldn’t affect it.

Executives claimed that Equinix’s high AFFO came from ...