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July 26 — South Carolina-based printer manufacturer 3D Systems Corp. lost its bid to dismiss class claims it misrepresented the effect its rapid acquisition strategy would have on its financial position ( KBC Asset Mgmt. NV v. 3D Sys. Corp., 2016 BL 238183, D.S.C., No. 0:15-cv-02393, 7/25/16 ).
The plaintiffs provided enough factual detail to support their claims and adequately alleged culpable intent, Judge Mary G. Lewis of the U.S. District Court for the District of South Carolina said July 25.
3D Systems sought to expand its product line and maintain its position as the market leader by acquiring several other 3D printing companies, the court said. According to the complaint, the company made promising statements about its record-breaking profits, successful acquisitions, and high growth rates when in fact it was having serious problems meeting its sales and revenue growth projections. 3D Systems ultimately reported underwhelming profits, didn't meet financial projections, and terminated its acquisition strategy. The failed venture caused the company's stock price to plummet 76 percent.
3D Systems moved to dismiss the claims for failing to meet the Private Securities Litigation Reform Act's heightened pleading standards. The company also contended that the complaint didn't adequately allege scienter—culpable intent.
Denying the motion, the court said the complaint sufficiently sets out the time, place and content of the alleged misstatements as well as the identity of the person making them. Additionally, the plaintiffs adequately explained why the statements are misleading and the facts they relied on, Lewis said.
The court also found that the complaint establishes a strong inference of scienter, as the alleged misrepresentations were made by high-level company executives who were “intimately involved” in the business and had access to confidential information about the 3D Systems' financial state as a result of the acquisition strategy.
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To view the opinion, visit: http://www.bloomberglaw.com/public/document/KBC_Asset_Management_NV_v_3D_Systems_Corporation_et_al_Docket_No_.
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