Robbins Geller Defeats 3D Systems’ Motion to Dismiss Securities Case
On July 25, 2016, Judge Mary Geiger Lewis, United States District Court Judge for the District of South Carolina, issued an order denying defendants’ motion to dismiss claims for securities fraud against 3D Systems Corporation (“3D Systems”), a manufacturer and seller of 3D printing products and services, and its former CEO Abraham N. Reichental and former CFOs Damon J. Gregoire and Ted Hull. This case arises out of allegations that defendants misrepresented the true financial and operational state of the company during a rapid, ill-fated expansion strategy they had undertaken. During the class period, defendants Reichental and Gregoire sold their own shares of company stock for total proceeds of over $17 million.
In denying the motion to dismiss, the court rejected defendants’ argument that the complaint failed to adequately plead that “3D Systems misrepresented the state of their product quality and customer reception to investors.” The court also declined to accept defendants’ mismanagement argument, stressing that “this case is about more than mismanagement” of things like inventory control and product quality, given that defendants allegedly “misrepresented the state of those affairs to investors.” Moreover, the court determined that “[i]n combination with their positions at 3D Systems, [the Individual Defendants’] revelations of personal and intimate involvement with many of the allegedly misrepresented issues allows the Court to reasonably infer each Individual Defendants’ knowledge regarding the true state of affairs at 3D Systems.”
In commenting on the decision, Robbins Geller partner Jack Reise said, “We are gratified by the well-reasoned decision and look forward to moving to the next phase of the case, during which we will continue to aggressively prosecute the investors’ claims.”
KBC Asset Management NV v. 3D Systems Corporation, et al., No. 0:15-cv-02393-MGL, Memorandum Opinion and Order Denying Defendants’ Motion to Dismiss the Amended Consolidated Complaint (D.S.C. July 25, 2016).
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