On March 25, 2020, the Honorable Dustin B. Pead, Magistrate Judge for the U.S. District Court for District of Utah, entered an order appointing the Indiana Public Retirement System and the Public School Teachers’ Pension and Retirement Fund of Chicago as Lead Plaintiff, and Cohen Milstein as Lead Counsel in this securities fraud class action.
Cohen Milstein’s amended complaint, filed June 9, 2020, asserts claims against Pluralsight, Inc., a provider of cloud-based and video training courses for software developers, IT administrators, and other creative professionals, its Chief Executive Officer (“CEO”) and Chairman, Aaron Skonnard, and Chief Financial Officer (“CFO”), James Budge, and other officers, as well as its co-lead underwriters, Morgan Stanley & Co LLC and J.P. Morgan Securities LLC, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
Originally filed in the U. S. District Court for the Southern District of New York, and later transferred to the District of Utah, this securities fraud class action is brought on behalf of investors who purchased or otherwise acquired Pluralsight common stock from January 16, 2019 through July 31, 2019 (the “Class Period”).
As alleged in the amended complaint, shortly before the start of the Class Period, Pluralsight completed its initial public offering (“IPO”), raising $331.2 million in net proceeds. Less than a year later, on March 7, 2019, Pluralsight completed a secondary public offering (“SPO”), whereby certain of its executive officers, Board members and company insiders sold 15.6 million shares at a price of $29.25 per share, for gross proceeds of approximately $456 million. According to the amended complaint, the SPO served as a massive cash-out, as all the proceeds went to Company insiders and related parties, and none of the money went to fund corporate developments or initiatives.
The amended complaint alleges that throughout the Class Period, Pluralsight misrepresented the capacity of the Company’s salesforce and its ability to generate strong growth in billings. Specifically, the Company failed to disclose that Pluralsight was experiencing substantial delays in hiring and properly training the salesforce necessary to fuel its sustained growth. In addition, the Company knew at the time of the March 2019 SPO that it was behind schedule onboarding new sales representatives, which was hurting the Company’s sales execution abilities and preventing Pluralsight from continuing to grow at its historical rate. Instead of disclosing such facts at the time of the SPO, and to cash out at inflated prices, Defendants intentionally withheld this pertinent information from investors.
On July 31, 2019, after the close of the markets, Pluralsight announced dismal financial results for the second quarter ended June 30, 2019: specifically, that its billings growth rate had sharply deteriorated from over 40% to just 23% in the same quarter year-over-year. The Company blamed its declining growth in billings on sales execution challenges and other issues with its salesforce. Pluralsight also disclosed that its Chief Revenue Officer was resigning. In response to these disclosures, Pluralsight’s share price plummeted. The stock price fell $12.13 per share in a single day – a nearly 40% drop – to close at $18.56 per share on August 1, 2019, causing significant financial damages to the proposed class members.
Originally named, City of Birmingham Firemen’s and Policemen’s Supplemental Pension System, et al. v. Pluralsight, Inc., et al., the case is now captioned: Indiana Public Retirement System and Public School Teachers’ Pension and Retirement Fund of Chicago, et al. v. Pluralsight, Inc., et al., Case No. 1:19-cv-000128-JNP-DBP (D. Utah).