June 3, 2020
A New York federal judge has certified a class of investors in a securities suit against financial technology startup GreenSky Inc. that accuses the company of making misleading statements ahead of its initial public offering.
The green light issued by U.S. District Judge Alvin K. Hellerstein on Monday gives the investors who bought the 43.7 million shares of GreenSky Class A common stock in the May 2018 IPO a path to continuing their attempt to recoup losses.
Shareholders allege in their November 2018 suit that GreenSky — which arranges loans between merchants and consumers — didn’t disclose in its registration statement to the U.S. Securities and Exchange Commission that its plan to shift away from highly profitable loans for solar panel purchases could affect its bottom line.
Investors claim GreenSky, along with its director and underwriters, was deceptive in omitting from the document its planned expansion into the elective health care field, leading to the company’s stock dropping 60% just months after the IPO raised $874 million.
In his order Monday, Judge Hellerstein named lead plaintiffs Northeast Carpenters Annuity Fund, El Paso Firemen and Policemen’s Pension Fund, and the Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge class representatives and lead counsel Cohen Milstein Sellers & Toll PLLC and Scott+Scott Attorneys at Law LLP as class counsel.
“Plaintiffs are pleased by the court’s order on class certification and look forward to getting into merits discovery and pushing the case forward,” Steven J. Toll, counsel for the investors, told Law360 Wednesday.