SmileDirectClub, Inc. Class Action Lawsuit
- Company Name
- SmileDirectClub, Inc.
- Stock Symbol
- Class Period
- September 8, 2019 and October 2, 2019, including purchasers pursuant to the September 12, 2019 initial public offering
- Motion Deadline
- December 1, 2019
- Eastern District of Michigan
On October 2, 2019, the SmileDirectClub, Inc. class action lawsuit was filed charging SmileDirectClub, certain of its officers and directors, and the underwriters of SmileDirectClub’s September 12, 2019 initial public offering (“IPO”) with violations of the Securities Act of 1933. The SmileDirectClub class action lawsuit was commenced in the Eastern District of Michigan on behalf of purchasers of SmileDirectClub Class A common stock pursuant to the IPO and is captioned Andre v. SmileDirectClub, Inc., No. 2:19-cv-12883. A second class action lawsuit against SmileDirectClub was filed in the Southern District of New York alleging violations of the Securities Exchange Act of 1934 on behalf of purchasers of SmileDirectClub Class A common stock between September 8, 2019 and October 2, 2019 (the “Class Period”).
SmileDirectClub manufactures, markets, and sells clear aligners for the treatment of misaligned teeth. Unlike braces and clear aligners that are prescribed and fitted by traditional dentists in their offices, SmileDirectClub sends an impression kit to a customer who creates an impression of their mouth and ships it back to SmileDirectClub. According to SmileDirectClub, the impression is then used to create a digital picture of the customer’s mouth that is reviewed by a dentist or orthodontist, who oversees the treatment process, and used to create the customer’s aligner.
On or about May 3, 2019, SmileDirectClub filed with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-1, which, after several amendments, would be utilized for the IPO. The SEC declared the Registration Statement effective on September 11, 2019, and SmileDirectClub commenced the IPO, selling approximately 58.5 million shares of SmileDirectClub Class A common stock at $23 per share.
The SmileDirectClub class action lawsuit alleges that the Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Specifically, the Registration Statement failed to disclose, among other things, that the efficacy of SmileDirectClub’s treatment was overstated; that administrative personnel, rather than licensed doctors, provided treatment to SmileDirectClub’s customers and monitored their progress, and thus, SmileDirectClub’s practices did not qualify as teledentistry under applicable standards; and that, as a result, SmileDirectClub was subject to regulatory scrutiny for the unlicensed practice of dentistry.
On September 24, 2019, a class action complaint was filed by dentists, orthodontists, and consumers against SmileDirectClub alleging false advertising, fraud, negligence, and unfair and deceptive trade practices. The class action complaint disputed the accuracy of several statements in the Registration Statement and alleged, among other things, that SmileDirectClub’s practices do not meet the American Dental Association’s standard for “teledentistry” because its “‘affiliated dentists’ do not interact directly or even indirectly with customers.” On this news, the price of SmileDirectClub’s stock fell $1.47 per share, or nearly 9%, to close at $15.68 per share on September 24, 2019. In the following weeks, the price of SmileDirectClub’s stock continued to fall, to less than $13 per share by the beginning of October 2019, when the complaint was filed, a nearly 44% decline from the $23 per share IPO price, and to $10 per share by mid-October.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased SmileDirectClub Class A common stock during the Class Period, including purchasers pursuant to the IPO to seek appointment as lead plaintiff in the SmileDirectClub class action lawsuit. A lead plaintiff will act on behalf of all other class members in directing the SmileDirectClub class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the SmileDirectClub class action lawsuit. An investor’s ability to share in any potential future recovery of the SmileDirectClub class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the SmileDirectClub class action lawsuit or have questions concerning your rights regarding the SmileDirectClub class action lawsuit, please provide your information here or contact counsel, Brian E. Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at email@example.com. Lead plaintiff motions for the SmileDirectClub class action lawsuit must be filed with the court no later than December 1, 2019.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.