RM LAW, P.C. announces that it has filed a class action lawsuit in the Middle District of Tennessee on behalf of all persons or entities that purchased or otherwise acquired SmileDirectClub, Inc. (“SmileDirectClub” or the “Company”) (NASDAQ: SDC) Class A common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s September 2019 initial public offering (“IPO” or the “Offering”).
SmileDirectClub shareholders may, no later than December 2, 2019, move the Court for appointment as a lead plaintiff of the Class. If you purchased shares of SmileDirectClub and would like to learn more about these claims or if you wish to discuss these matters and have any questions concerning this announcement or your rights, contact Richard A. Maniskas, Esquire toll-free at (844) 291-9299 or to sign up online, click here.
On September 13, 2019, the Company filed its prospectus on Form 424B4 with the SEC, which forms part of the Registration Statement. In the IPO, the Company sold approximately 58.5 million shares of Class A common stock at a price of $23.00 per share. The Company received proceeds of approximately $1.27 billion from the Offering, net of underwriting discounts and commissions.
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 complaint disputed the accuracy of several statements in the Registration Statement and highlighted that the Company is subject to litigation for operating as a dentist without proper licensing in several states, as well as other litigation.
On this news, the Company’s share price fell $1.47, or nearly 9%, to close at $15.68 per share on September 24, 2019, on unusually heavy trading volume. The price stock continued to decline over the next two trading sessions by $2.74, or over 17%, to close at $12.94 per share on September 26, 2019, on unusually heavy trading volume.
The Company’s stock would close on October 21, 2019 at $9.13 per share, a 60% decline from the $23 per share IPO price.
The complaint alleges that the Registration Statement was false and misleading and omitted to state material adverse facts. Specifically, the defendants failed to disclose to investors that: (1) that administrative personnel, rather than licensed doctors, provided treatment to the Company’s customers and monitored their progress; (2) that, as a result, the Company’s practices did not qualify as teledentistry under applicable standards; (3) that, as a result, the Company was subject to regulatory scrutiny for the unlicensed practice of dentistry; (4) that the efficacy of the Company’s treatment was overstated; (5) that the Company had concealed these deceptive marketing practices prior to the IPO; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.
If you are a member of the class, you may, no later than December 2, 2019, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain RM LAW, P.C. or other counsel of your choice, to serve as your counsel in this action.