Introduction
Welcome to the Q3 2024 edition of A&O Shearman's Fifth Circuit Securities Litigation Quarterly. As public companies and financial institutions continue to migrate to Texas, our Texas-based securities litigation team continues to monitor all developments and help our clients navigate the unique landscape for federal securities litigation in the Fifth Circuit. In our Q3 2024 edition, we cover six new case filings, one settlement, five district court decisions on pleading stage and summary judgment issues, and other decisions of note.
New securities class action filings
XPEL (W.D. TEX., 5:24-CV-00873, FILED AUG. 8, 2024)
Filed on behalf of a putative class of persons who purchased XPEL Inc. securities between November 8, 2023 and May 2, 2024 Asserts claims under the Securities Exchange Act of 1934 Alleges Defendants made false and/or misleading statements and/or failed to disclose that "(i) XPEL's competitors were siphoning an increasingly large segment of the market; (ii) as a result, the Company's revenue growth became increasingly dependent upon existing customers and partners; (iii) as a result, the Company's revenue growth for 2023 and 2024 dwindled; and (iv) as a result, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis."
NEXT BRIDGE HYDROCARBONS (N.D. TEX. , 4:24-CV- 00767, TRANSFERRED AUG. 12, 2024)
Filed on behalf of a putative class of persons who acquired Next Bridge Hydrocarbons, Inc. shares in connection with the Company's spin-off from Meta Materials, Inc. on December 14, 2022
Asserts claims under the Securities Act of 1933
Alleges that the registration statement in connection with the spin-off contained untrue statements of material fact and/or omitted to state material facts to make the statements therein not misleading concerning (i) "the value of [certain oil and gas] Assets", (ii) the Company's "ability to present accurate financial statements," and (iii) "[i]nformation required under Item 404 of Regulation S-K concerning a related-party transaction involving certain [oil and gas] Assets."
ORTHOFIX (E.D. TEX., 2:24-CV-00690, FILED AUG. 21, 2024)
Filed on behalf of a putative class of persons who purchased Orthofix Medical Inc. common stock between October 11, 2022 and September 12, 2023
Asserts claims under the Securities Exchange Act of 1934
Alleges that "Defendants issued false and misleading statements and/or failed to disclose adverse facts about the Company's management team" and that Defendants "falsely assured the market that Orthofix's management team consisted of individuals committed to conducting business in accordance with the highest ethical and legal standards, and further, that these individuals believed in and fostered a strong performance-based culture focused on integrity, collaboration, innovation, diversity, and corporate responsibility."
BUMBLE (W.D. TEX. , 1:24-CV-01131 , FILED SEPT. 24, 2024)
Filed on behalf of a putative class of persons who purchased Bumble Inc. securities between November 7, 2023 and August 7, 2024
Asserts claims under the Securities Exchange Act of 1934
Alleges that Defendants "provided overwhelmingly positive statements to investors while, at the same time, disseminating materially false and misleading statements and/or concealing material adverse facts concerning Bumble's relaunch strategy, including: Premium Plus and base tiers, focused engagement and more personalized experiences for younger users, and enhancing premium offerings for paid subscription members."
New securities class action settlement
SIX FLAGS (N.D. TEX., 4:20-CV-00201)
$40 million settlement of case asserting claims under the Securities Exchange Act of 1934
Case initially filed on February 12, 2020. In early 2021, the court granted Defendants' motion to dismiss with prejudice. The Fifth Circuit reversed the dismissal in early 2023. In June 2023, the court granted
Defendants' motion for judgment on the pleadings and dismissed the action with prejudice. The Fifth Circuit again reversed the dismissal in April 2024. The case resolved during fact discovery. Motion for preliminary approval of settlement filed on September 3, 2024.
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