Walleye Trading LLC v. MINDBODY, Inc.

Updated: June 21, 2022
Status: Pending Court Approval

On November 7, 2019, Labaton Sucharow was appointed lead counsel in a securities class action lawsuit against MINDBODY, Inc. (“MINDBODY” or the “Company”) and certain officers and directors (collectively, “Defendants”).  The MINDBODY Action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 promulgated thereunder, on behalf of former owners of MINDBODY Class A common stock who sold shares during the period from November 6, 2018 through February 15, 2019, both dates inclusive (the “Class Period”), and were damaged thereby (the “Class”).  The Firm represents lead plaintiffs Walleye Trading LLC and Walleye Opportunities Master Fund Ltd. 

Founded in 2001, MINDBODY is a provider of cloud-based business management software for the wellness services industry, e.g., salons and spas, and a rapidly growing marketplace for wellness services.  The Company offers integrated software and payment platforms to assist wellness business owners run, market, and build their businesses, while engaging consumers by aggregating available classes and appointments, and enabling rapid discovery, booking and payment.  The Company conducted its initial public offering in June 2015.

In early 2018, the Company underwent several successful acquisitions.  Following these acquisitions, which Defendants defined as “pivotal,” investors were repeatedly assured that MINDBODY was on track to successfully integrate the companies, and that the acquisitions offered a substantial value proposition for the Company.  

Unknown to investors at this time, however, was that in the latter half of 2018, CEO Richard Stollmeyer had been in discussions with Vista concerning a potential sale of the Company.  The MINDBODY Board of Directors only became aware of these discussions between Stollmeyer and Vista in late October 2018, when it convened to discuss Vista’s interest in the Company.

On November 6, 2018, Defendants allegedly intentionally issued disappointing guidance for the Company’s upcoming fourth quarter 2018 in order to artificially depress the price of the Company’s stock, attributing it to integration issues with MINDBODY’s early 2018 acquisitions.  The market, having previously been informed that the integrations in question were on track, reacted poorly, causing the price of MINDBODY Class A common stock to fall.

Shortly thereafter, Defendants informed investors that the Company’s Board had approved a merger agreement with Vista.  Pursuant to the agreement, holders of the Company’s common stock would receive $36.50 in exchange for their shares, with Vista taking MINDBODY private upon completion.  Defendants touted this as a 68 percent premium to the Company’s December 21, 2018 closing price.

Unknown to MINDBODY investors, however, is that by January 18, 2019, Defendants allegedly knew that the Company’s fourth quarter 2018 results had materially exceeded not only current analyst estimates, but also those estimates issued prior to disappointing November 6, 2018 guidance.

During January and February, Defendants issued proxy materials urging MINDBODY shareholders to vote “FOR” the transaction, touting the price of $36.50 as a substantial premium for MINDBODY shareholders.  These proxy materials, however, allegedly failed to disclose the “meaningful” fourth quarter 2018 results necessary for investors to make an informed decision whether to vote in favor of the proposed transaction.

Based, in part, on Defendants’ failure to disclose MINDBODY’s favorable fourth quarter 2018 financial results, which allegedly would have raised questions regarding whether the merger consideration was fair, MINDBODY shareholders approved the transaction on February 14, 2019.  The following day, Defendants reported the closing of the transaction, and MINDBODY shareholders received $36.50 in exchange for their shares.

As a result of these allegedly material misrepresentations and omissions, MINDBODY shareholders were allegedly misled into selling their shares for less than the fair value of those shares, which fair price was greater than $36.50.

The Parties participated in a mediation session on May 12, 2021 and agreed to settle the Action for $9,750,000 in December 2021, pursuant to a Mediator’s proposal. The Parties executed the Stipulation and Agreement of Settlement on March 3, 2022.

The case is in In re Mindbody Inc. Securities Litigation, Civil Action No. 1:19-cv-08331-VEC (S.D.N.Y.). The Defendants are Mindbody, Inc, Richard L. Stollmeyer and Eric Liaw.

Submit Claim Form

If you sold shares of the publicly traded Class A common stock of Mindbody, Inc. (Ticker: MB) during the period from November 6, 2018 through February 15, 2019, inclusive, and were allegedly damaged thereby, you may be entitled to a payment from a class action settlement.  To be eligible for a payment, you must submit a Claim Form to the Claims Administrator by September 27, 2022.

Settlement Hearing

The Court will hold a Settlement Hearing on October 27, 2022 at 2:30 p.m. EDT in Courtroom 443 Thurgood Marshall United States Courthouse of the United States District Court for the Southern District of New York, 40 Foley Square, New York, NY 10007.

If you have questions about the Settlement, please contact Labaton Sucharow at settlementquestions@labaton.com or 1-888-219-6877, or contact the Claims Administrator, at (866) 274-4004.

Additional information about the Settlement can also be found at www.strategicclaims.net/mindbody/.