Calgary’s Smart Technologies is under fire over its $660-million initial public offering.
Law firm Siskinds recently announced the follow-up lawsuit against the digital whiteboard maker, stating that it is seeking compensation to the tune of $100 million on behalf of people who acquired shares of Smart during the IPO last July.
Early investors bought Smart shares for $17 each. However, the shares plummeted after financial statements were made public in November. Why? Because Smart didn’t disclose that it had a massive decline in sale growth and a company it acquired was performing terribly.
Quoth the Ottawa Business Journal:
The complaint named the company, its board, chief financial officer and certain IPO underwriters as defendants and claimed “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, that the company was not proceeding according to plan.”
The complaint claimed SMART did not properly disclose the effect of a slowdown in SMART’s second quarter of its fiscal 2011 year that made it impossible to achieve projected rates of growth, earnings, revenues and profits and hurt the firm’s outlook for the rest of the year, leading to a decline in share price. SMART made its public debut with a share price of $17.80 in July, but since then the stock’s value has plummeted, reaching a low of $8 on Nov. 15.
Smart hasn’t released any public statements regarding this suit. Back in December, it did address the original suit: “SMART believes that such suits are without merit and is confident that SMART has complied with all applicable securities laws requirements. SMART intends to vigorously defend such suits.” Siskinds doesn’t appear to be commenting on the suit either.
This isn’t apt to be resolved in the near future, knowing how most major cases drag on, but if Smart—which recently had to lay off several dozen employees—loses, it could be the final nail in the coffin for a waning business soaked in controversy