On October 24, 2016, the Ninth Circuit issued a unanimous opinion in plaintiffs’ favor on the Securities Act of 1933 (“1933 Act”) claims previously dismissed by the district court in In re Ubiquiti Networks, Inc. Securities Litigation. Plaintiffs appealed the district court’s dismissal of their complaint alleging that Ubiquiti and its officers violated §§11 and 15 of the Securities Act of 1933 and §§10(b) and 20(a) of the Securities Exchange Act of 1934 (“1934 Act”). Additionally, plaintiffs alleged the underwriters of Ubiquiti’s IPO violated the 1933 Act. The Ninth Circuit reversed the dismissal of the 1933 Act claims, while affirming the dismissal of the 1934 Act claims. Thus, the 1933 Act claims will be remanded to the district court for further proceedings.
Ubiquiti Networks, Inc. manufactures wireless data communication products for enterprise and wireless broadband providers. In 2013, Ubiquiti claimed that rival company Kozumi USA obtained blueprints from a former Ubiquiti employee and used them to sell duplicate products in South America, causing Ubiquiti stock prices to decline. Plaintiffs allege that Ubiquiti concealed the extent of the counterfeiting crisis from shareholders, resulting in shareholders purchasing stock they otherwise would not have purchased.
In reversing the dismissal of the 1933 Act violations, the court noted that “the registration statement misrepresented the true extent of counterfeiting and the misrepresentation would have misled a reasonable investor.”
Robbins Geller appellate partner Susan K. Alexander argued to the Ninth Circuit, and attorneys Christopher P. Seefer and Ashley M. Price are litigating the case in the district court. The Firm is serving as co-lead counsel on the case.
In re Ubiquiti Networks, Inc. Sec. Litig., No. 14-15962, Memorandum (9th Cir. Oct. 24, 2016).