Robbins Umeda LLP’s* IGT Suit Makes Headlines in Law360
On July 12, 2010, New York-based Law360reporter Nick Brown reported on a derivative securities suit initiated by a shareholder of International Game Technology (IGT), a company that provides slot machines and other gaming apparatus to the gambling industry, against sixteen current and former directors of the company.
The suit, filed by Robbins Umeda LLP and two other firms on behalf of the IGT shareholder, alleges misstatements about the company’s finances and irresponsible spending on technology upgrades, which led to an 85% drop in IGT’s market capitalization.
The complaint asserts the named directors sold almost 650,000 shares for $27.8 million after causing stock value to inflate artificially, violating the U.S. Securities and Exchange Act of 1934 including: breach of fiduciary duty, waste of corporate assets, and unjust enrichment. According to the complaint, executives told stakeholders the company was primed for enormous growth and downplayed the effect of the economic recession.
Plaintiff is seeking damages, restitution, and disgorgement, as well as several corporate governance changes. He demands greater shareholder input, nomination rights for shareholders, and programs to ensure the qualifications of directors, prevent insider selling, and control research and development spending.
The case, Sprando v. Hart, et al., case number 10-cv-00415, names as defendants IGT’s Chief Executive Officer Patti S. Hart, Chief Financial Officer Patrick W. Cavanaugh, and other directors, and was filed July 9, 2010, in the U.S. District Court for the District of Nevada.
* The firm name changed from Robbins Umeda LLP to Robbins Arroyo LLP on January 1, 2013.