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Wednesday, September 18, 2019

Investor’s class action seeks restitution for alleged IPO fraud

By Robert Hadley | Jun 9, 2016

SAN FRANCISCO (Legal Newsline) – A California man is suing the consumer electronics firm Fitbit, alleging it defrauded investors in its initial public offering.

Paul Rivera, individually and on behalf of all others similarly situated, filed a lawsuit in San Mateo County Superior Court against Fitbit Inc., Chairman James Park, chief technology officer Eric N. Friedman, chief financial officer William Zerella, lead independent director Jonathan D. Callaghan; directors Steven Murray and Christopher Paisley, and several firms serving as underwriters for the initial public offering: Morgan Stanley & Company LLC, Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., Barclays Capital Inc., Suntrust Robinson Humphrey Inc., Piper Jaffray & Co., Raymond James & Associates Inc., Stifel, Nichlaus & Company Inc., William Blair & Company LLC, and 25 unnamed defendants.

Fitbit has petitioned to remove the case to U.S. District Court for the Northern District of California, arguing the case falls under federal jurisdiction because it deals with a Securities Act claim.

According to the complaint, Rivera purchased common stock in Fitbit after its initial public offering June 22, 2015. On Jan. 5, 2016, the suit states, a class action lawsuit was brought against the company because of alleged problems with its heart-monitoring technology. 

Since the public has learned of the alleged glitch, the stock price has fell below $12 per share, about 40 percent off the IPO price, the lawsuit states. The suit alleges the IPO’s registration statement misstated facts about the company’s heart monitoring technology.

The plaintiffs seek a jury trial and compensatory damages, plus litigation costs. They are represented by attorneys Brian J. Robbins, George C. Aguilar and Jay N. Razzouk of Robbins Arroyo LLP in San Diego.

U.S. District Court for the Northern District of California Case number 4:16-cv-02890

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Morgan Stanley U.S. District Court for the Northern District of California