Labaton Sucharow Secures Favorable Recovery in Securities Class Action Against Software CompanyNEW YORK (December 4, 2015) – Labaton Sucharow LLP announced today that the Firm achieved an $8.55 million settlement in a securities class action on behalf of Plymouth County Retirement System (Plymouth County) in Plymouth County Retirement System v. Model N, Inc., No. CIV 530291, against Model N, Inc. (Model N), a leading revenue management software company for the life sciences and technology industry, and certain of its directors, officers, and underwriters. The settlement is subject to the approval of the Superior Court of California for the County of San Mateo, in Redwood City, California.
On March 20, 2014, Model N went public in an initial public offering (IPO). This IPO was successful for the company, its underwriters, and the venture capital firm that collectively sold 7.751 million shares of Model N common stock to the public at $15.50 per share, raising more than $108 million in gross proceeds for the company.
Led by Labaton Sucharow partner David J. Goldsmith, the Firm and co-lead counsel represented Plymouth County and certain named individual plaintiffs, alleging that the offering materials for the IPO, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, made inaccurate statements and omitted adverse, material facts about Model N’s true financial condition that the company was required to disclose. Specifically, the plaintiffs alleged that the offering materials failed to disclose that, at the time of the IPO, Model N was experiencing sales execution challenges—the inability to close and book sales. These challenges reversed the booking and revenue trends reported in Model N’s offering materials, causing future bookings and revenue to decline. At the time the action was filed, Model N’s stock was trading as low as $9.50 per share—a decline of 38 percent from the IPO price.
“Plymouth County is committed to protecting the interests of its members, and we believe it is our duty to pursue recovery for our members and the class when the securities laws have been violated. We are pleased with the result and are happy to bring the settlement back to the class and seek the Court’s approval,” said Treasurer Thomas J. O'Brien, Chairman of the Plymouth County Retirement Board.