Rekor Systems, Inc. announced on October 16, 2026, that it has filed a verified complaint in the Court of Chancery of the State of Delaware against Viraj Mehta, a former member of its Board of Directors. The action alleges breaches of fiduciary duty, specifically regarding the Company’s December 2025 financing with a hedge fund. The complaint addresses alleged failures to disclose material information and potential conflicts of interest that may have influenced the Board’s evaluation of the transaction.
The filing was authorized by Rekor's Board of Directors following months of investigation by the Company and its legal counsel. The complaint seeks compensatory damages, disgorgement, restitution of director compensation, and other appropriate relief. As stated in the filing, the allegations have not been adjudicated, and the Company cannot predict the outcome of the legal proceedings.
In a press release issued on October 19, 2026, Chairman and Chief Executive Officer Robert A. Berman explained that the Board took this action after a careful investigation. He emphasized that directors have an obligation to provide complete and candid information during critical financing decisions. The Company stated that this legal action is a first step in a broader review of the matter.
The Company noted that its review includes an examination of unusually high stock-borrow utilization rates and other unusual activity in its common stock. Rekor previously disclosed in an April 14, 2025, Form 8-K that it identified an accumulation of approximately 14% of its outstanding common stock through a single Depository Trust Company participant. The Company has notified the SEC and FINRA regarding this matter and is evaluating potential noncompliance with beneficial ownership reporting requirements and potential recovery of short-swing profits under Section 16(b) of the Securities Exchange Act of 1934. The Company has not independently verified third-party securities-lending data and has not established any violation of unlawful trading activity.
