According to the law firm press release, CPI is a leading provider of payment card production and related services, offering a single source for credit, debit and prepaid debit cards, including “EMV” (Europay, MasterCard and Visa) chip, personalization, instant issuance, fulfillment and mobile payment services. CPI markets its products and services to national and regional banks, independent community banks, credit unions, managers of prepaid programs, group service providers, and card processors through field-based sales representatives in North America, Western Europe, the United Kingdom and Canada.
The complaint alleges that at the time of the IPO, unbeknownst to investors, the Company had shipped upwards of 100 million more cards to its larger issuer customers than they were using in the second quarter and first part of the third quarter of 2015, resulting in the buildup of a massive backlog with those customers, which was significantly reducing the demand for additional card shipments in the fourth quarter of 2015 and fiscal 2016. The adverse events and uncertainties associated with CPI’s largest customers’ inventory levels was reasonably likely to have a material impact on CPI’s profitability and, therefore, was required to be disclosed in the Registration Statement, but was not.
The IPO was successful for the Company, the selling stockholders and the underwriters who sold 17.25 million shares of CPI common stock at $10 per share, raising $172.5 million in gross proceeds. At the time of the filing of the complaint, CPI common stock was trading at $4.70 per share – 53% less than the IPO price.
On August 30, 2016, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated Complaint on October 17. Defendants filed a Motion to Dismiss the consolidated Complaint on November 16. On October 30, 2017, the Court issued an Order denying Defendants' Motion to Dismiss.
On April 23, 2018, Lead Plaintiff filed a Motion for Class Certification. On July 30, the parties reached an agreement in principle to settle the claims. On September 4, the Court issued an Order denying the Motion for Class Certification. On September 21, the parties entered into a Stipulation and Agreement of Settlement. On October 22, the Court issued preliminary approval of the Settlement.