Ply Gem Investors Defeat Motion to Dismiss in Securities Class Action
On September 23, 2016, Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York denied in part defendants’ motion to dismiss in In re Ply Gem Holdings, Inc. Securities Litig. The securities class action charges Ply Gem, certain of its officers and directors and the underwriters of Ply Gem’s May 23, 2013 initial public offering (“IPO”) with violations of the Securities Act of 1933.
Ply Gem is a manufacturer of exterior building products for the residential and commercial construction, do-it-yourself, and professional remodeling and renovation markets, whose products are primarily sold in the United States and Canada. The case alleges that the defendants violated the Securities Act in connection with its May 23, 2013 IPO by omitting (or misstating) material information in Ply Gem’s Form S-1 registration statement and prospectus. Pointing to four deficiencies in the defendants’ public disclosures, the plaintiff brought forth new information regarding the magnitude of the alleged omissions. These known, but undisclosed, events had a material adverse effect on Ply Gem’s operating results during its second quarter ended June 29, 2013. At the time of the filing of the lawsuit on May 19, 2014, Ply Gem common shares were trading in a range between $10.50 and $11 a share – 50% less than the IPO price. The court stated that the “Plaintiff’s bolstered quantitative allegations help support its claim that the omissions were material.”
In re Ply Gem Holdings, Inc. Securities Litig., Case No. 14-cv-03577, Opinion and Order (S.D.N.Y. Sept. 23, 2016).