SMART Technologies, Inc.
Summary of Case:
A securities class action has been filed against SMART Technologies, Inc. (SMT) ("SMART Technologies" or the "Company") on behalf of the purchasers of SMART Technologies common stock pursuant to its July 2010 Initial Public Offering ("IPO" or the "Offering") of 38.83 million shares of common stock that closed on July 20, 2010. The case has been filed in the United States District Court for the Southern District of New York.
The complaint alleges that SMART Technologies, its entire Board of Directors, its Chief Financial Officer, and the underwriters involved in the Offering, included or allowed the inclusion of materially false and misleading statements in the Registration Statement and Prospectus issued in connection with the Company's IPO, in direct violation of the Securities Act of 1933.
In connection with this Offering - of which 8.8 million shares were sold by the Company and 30.03 million shares of which were sold by insiders - the total price to the public in connection with this offering was over $660.11 million, with total underwriters discounts and commissions totaling over $39.854 million, shares sold by the selling insiders totaling over $510.51 million and shares sold by the Company totaling $149.6 million.
Specifically, the complaint alleges that defendants each failed to conduct an adequate due diligence investigation into the Company prior to the IPO, and they also each failed to reveal, at the time the IPO closed - which occurred almost one third of the way through the fiscal second quarter of 2011, the period ended September 30, 2010 - that the Company was not proceeding according to plan and that SMART Technologies' sales already had been adversely impacted by a slowdown during fiscal 2Q:11 which would make it impossible for SMART Technologies to achieve its projected rates of growth, earnings, revenues, and profits.
It was only on November 9, 2010, after the close of trading - and after Company insiders liquidated over $510.51 million of their privately held shares in or in connection with the IPO - that SMART Technologies revealed the truth about the Company, including that the problems which existed at the time of the IPO would result in extremely disappointing results for the fiscal second quarter of 2011 - including a decline in quarterly profits of at least 22% - and that the outlook for the remainder of the year continued to be adversely impacted.
The following trading day, on the publication of this news, SMART Technologies stock price declined precipitously. As evidence of this, the following day, as shares of the Company resumed trading, shares of SMART Technologies fell over 30%, plummeting from $13.07 per share on November 9, 2010, to close at $8.91 per share the following day. On November 10, 2010, SMART Technologies also experienced exceptionally heavy trading volume with over 17.84 million shares traded, more than ten times the Company's recent average daily trading volume.
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