In re Diamond Resorts International, Inc. Securities Litigation

On September 26, 2018, Labaton Sucharow LLP was appointed lead counsel in this securities class action lawsuit against Diamond Resorts International, Inc., and certain of its senior executives. The action asserts claims under Rule 10b-5, and Sections 14(e) and 20(a) of the Securities Exchange Act of 1934 on behalf of all investors who were injured by selling shares during or in connection with a tender offer.

Diamond owns a network of international vacation destinations and sells vacation ownership “points,” which entitle the owner to reserve rooms in one of Diamond’s resort or hotel properties. On July 14, 2016, Dakota Merger Sub, Inc., a wholly-owned subsidiary of private equity firm Apollo Global Management LLC, commenced a cash tender offer to acquire Diamond at a purchase price of $30.25 per share.

The complaint alleges that the defendants hid material information from investors and made materially incomplete and misleading statements, including statements in Diamond’s Schedule 14D-9 Recommendation Statement, which recommended shareholders accept the tender offer. Among other things, defendants omitted the critical fact that Stephen J. Cloobeck, Diamond’s founder, Chairman, and largest stockholder, opposed the tender offer for reasons that directly contradicted the Board’s recommendation to the stockholders. Further, the Complaint alleges that Apollo offered lucrative consulting agreements to Mr. Cloobeck to induce him to eventually accept the tender offer.

The case is In re Diamond Resorts International, Inc. Securities Litigation, No. 18-cv-01355 (D. Nev.). Labaton Sucharow represents lead plaintiffs ODS Capital LLC and Nantahala Capital Management, LLC.