In re CPI Card Group Inc. Securities Litigation
Status: Ongoing Case
We prevailed on the motion to dismiss and the complaint was sustained in its entirety.
On August 29, 2016, Labaton Sucharow was appointed lead counsel in this securities class action against CPI Card Group Inc. (CPI) in connection with CPI’s initial public offering (IPO) that raised approximately $172.5 million in gross proceeds.
On October 17, 2016, the lead plaintiff filed a consolidated class action complaint alleging that the IPO’s Registration Statement made material misstatements and omissions in violation of the federal securities laws. In particular, the complaint alleges that CPI failed to disclose several negative trends or uncertainties that were known to the company at the time of the IPO. In particular, the complaint alleges that the offering materials omitted the fact that significant increases in the company’s sales leading up to the IPO would soon come to an end because CPI’s customers had become massively over inventoried with product during that time period. This, and other known challenges the company’s products were facing at the time of the IPO, resulted in decreased demand for the company’s products as well as increased pricing pressure and competition.
When the action was filed, CPI’s stock (PMTS) was trading 53 percent below the IPO price.
On October 30, 2017, the court denied the defendants’ motion to dismiss and then sustained the complaint in its entirety. The court concluded that the complaint adequately “allege[d] facts that make it plausible that CPI knew of a trend, the disclosure of which [was] required” and “[b]ecause CPI did not include information about the trend in its Registration Statement, plaintiffs have pleaded a violation of Section 11.”
The case is In re CPI Card Group Inc. Securities Litigation, No. 16-cv-04531 (S.D.N.Y.). Labaton Sucharow represents lead plaintiff Alex Stewart. The defendants are CPI Card, certain of its officers and directors, its controlling shareholders, and its IPO underwriters.