The Control4 Corporation has been hit with another class action lawsuit filed on behalf of all shareholders of their stock in connection with their acquisition by Wirepath Home Systems, LLC – better known as SnapAV. Filed by the law firm of Rigrodsky & Long, P.A., the lawsuit alleges certain violations of Securities Exchange Act of 1934 and names both Control4 and its Board of Directors as defendants.
See more on this litigation against Control4…
Lawsuits of this nature are not uncommon when company’s are acquired, as sometimes shareholders are the last to be considered in the company’s zeal to drive to seal a deal. In fact, a total of eight such actions have been filed against Control4 and its directors. About two weeks ago, one of those actions, Manasfi v. Control4 Corporation, et al. was voluntarily dismissed. The other seven actions, including this one, remain in force.
In the case of this filing, referred to in Control4 legal filings as the “Sabatini Action,” the plaintiffs allege that Control4 was not completely forthcoming in the materials it provided to the company’s shareholders, as is required by law. Versions of this same allegation exists in some of the other shareholder lawsuits as well.
Specifically, the official announcement of the lawsuit notes that:
“…in an attempt to secure shareholder support for the Proposed Transaction, defendants issued materially incomplete disclosures in a proxy statement (the ‘Proxy Statement’) filed with the United States Securities and Exchange Commission.”Press announcement by plaintiffs
‘Materially Incomplete Disclosures’
What do the plaintiffs mean by “materially incomplete disclosures?” The statement alleges that the Proxy Statement circulated to shareholders in fact “omits material information with respect to, among other things, Contro4’s financial projections and the analyses performed by Control4’s financial advisor.”
Having read the Proxy Statement, I can tell you that there was material presented in both of these areas – both the financial projections and the advisors’ judgment on the deal. However, I have to admit, neither was presented with much detail. For example, there were forecasts revealed in the Proxy, but no information on just what drove those projections. It is hard to gauge the value or accuracy of a forecast, without understanding the underlying assumptions that guided its creation.
I Am Not An Attorney, But…
As far as the information from Control4’s financial advisor, the company simply provided a letter from that advisor – whom we identified as Raymond James in our article on why Control4 decided to sell to SnapAV. That Raymond James letter simply provided their determination that this deal was good for shareholders, but again, provided little detail as to the factors they considered that led them to that conclusion.
So – and remember please I am NOT an attorney – it seems that there may be some exposure on Control4’s part relative to this process. Of course, they had their lawyers with them virtually every step of the way…so perhaps that provides them with some protection.
Looking for ‘Relief and Damages’
The plaintiffs are seeking “injunctive and equitable relief and damages on behalf of holders of Control4 common stock.” In other words, they are hoping to stop the acquisition so that the court can determine reasonable “relief and damages.”
Plaintiffs are also asking shareholders to reach out to them with any “questions concerning this notice or your rights or interests.” If you are one of those, you’ll want to speak with plaintiff’s counsel Seth D. Rigrodsky or Gina M. Serra of Rigrodsky & Long. You can reach them by phone at 888-969-4242 or by email at firstname.lastname@example.org.
The matter is captioned: Sabatini v. Control4 Corporation, Case No. 1:19-cv-01149 (D. Del.).