February 24, 2020
Investors in GreenSky Inc. have asked a New York federal judge to certify their proposed class action accusing the financial technology startup of making misleading statements ahead of its initial public offering, telling the court there is “no question” the action should be certified.
The shareholders allege the digital lender filed a deceptive registration statement with the U.S. Securities and Exchange Commission that failed to disclose key planned changes that could affect revenue.
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The November 2018 suit claims GreenSky — which arranges loans between merchants and consumers — along with its directors and its underwriters in the IPO didn’t mention in its registration statement that it planned an expansion into the elective health care field that was shifting its focus away from solar panel merchants.
The digital lender raised $874 million in an upsize IPO in May 2018 that priced at the top of its range at $23 per share, but GreenSky later lowered its full year 2018 guidance, triggering a stock drop of 60 percent from the IPO price, the investors said.
In November last year, U.S. District Judge Alvin K. Hellerstein swept aside GreenSky’s dismissal attempt, expressing skepticism that the startup lender’s disclosures were sufficient and saying “the prospectus cries out for an explanation.”
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The investors are represented by Alice Buttrick, Ji Eun Kim, S. Douglas Bunch and Steven Jeffrey Toll of Cohen Milstein Sellers & Toll PLLC, and Max Raphael Schwartz of Scott & Scott LLP