Labaton Sucharow, as lead counsel, secured for the class an $11 million cash fund, plus earned interest, to settle claims that CPI Card Group Inc. (“CPI”), which produces 35 percent of all payment cards in the U.S., oversold its chip-enabled financial card product ahead of its $172.5 million initial public offering. The defendants adamantly denied there was any liability, and the Court did not find in favor of defendants or the Class. The settlement was guided by a mediator.
Impacted shareholders claimed that CPI failed to disclose adverse trends affecting its card sales at the time of its October 2015 IPO, including that in the months prior CPI shipped over 100 million extra cards to its biggest customers, which include major debit and card issuers such as JP Morgan, American Express, and Bank of America, and that small and midsize card issuers were not quickly adopting chip card technology. Consequently, because of the high inventory of cards at large financial institutions and the inability to make up those sales in other market segments, CPI’s sales dropped significantly.
Lead plaintiff, Alex Stewart, lauded the settlement, “it is respectfully submitted that this recovery is a very favorable result for the settlement class.”
The case is In re CPI Card Group Inc. Securities Litigation, No. 1:16-cv-04531 (S.D.N.Y.).
The Labaton Sucharow team was led by partners Jonathan Gardner and Michael Canty, of counsel Alfred Fatale III, and associate Ross Kamhi.