Robbins Arroyo LLP: CPI Card Group, Inc. (PMTS) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against CPI Card Group, Inc. (NASDAQGS: PMTS) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of CPI Card Group securities pursuant to the company’s October 8, 2015 initial public stock offering (“IPO”), for alleged violations of the Securities Act of 1933 by CPI Card Group’s officers and directors. CPI Card Group, together with its subsidiaries, engages in the design, production, data personalization, packaging, and fulfillment of financial payment cards. It offers a single source for credit, debit, and prepaid cards including EMV (Europay, MasterCard, and Visa) chip, personalization, and mobile payment services.
CPI Card Group Accused of Failing to Disclose Card Backlog
According to the complaint, on October 9, 2015, CPI Card Group filed with the U.S. Securities and Exchange Commission the final prospectus for the company’s IPO, selling 17.25 million shares of CPI common stock at $10 per share and raising $172.5 million in gross proceeds. CPI’s Registration Statement represented that CPI had a “leading market position with long-term customer relationships” and that it believed it earned the #1 market position in the U.S. by unit volume. CPI further stated that it often has a “deep process and technology integration” with certain of its customers. In addition, the company reported positive financial results for the first six months of 2015, noting that net sales had increased by 80.5% and net income increased 408% compared to the six months ended June 30, 2014. CPI also reported that the demand for EMV cards increased sharply in the second half of 2014, and predicted that U.S. EMV conversion would increase the size of the financial payment card market.
The company’s Registration Statement was required to disclose events of uncertainties, including any known trends that have had or are reasonably likely to cause the registrant’s financial information not to be indicative of future operating results. The complaint alleges that the Registration Statement was negligently prepared because it failed to disclose that CPI’s largest customers of EMV cards were significantly over-inventoried. EMV purchases in the first half of 2015 were far in excess of card issuance, resulting in a massive backlog of cards. As a result, CPI’s largest customers would significantly reduce their purchases from CPI in the fourth quarter of 2015, the remainder of fiscal year 2015, and fiscal year 2016. CPI common stock currently trades at about $4.54 per share—54.6% less than the $10 per share IPO price.
CPI Card Group Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
Send This Post