Local 705 International Brotherhood of Teamsters Pension Fund v. Diamond Resorts International, Inc. 2:18-cv-01355 On July 23, 2018, shareholders sued Diamond Resorts International, Inc. (Diamond, DRII, or the Company) in United States District Court, District of Nevada. Plaintiffs in the DRII class action allege that they tendered their Diamond Resorts stock at an unfair price between July 14 2016, and September 1, 2016. They are now seeking compensation for financial losses stemming from the Company’s alleged misconduct during that time. For more information on the DRII Lawsuit, please read below and feel free to reach out to us with any questions or concerns.

Summary of the Allegations

Company Background

The Company (NYSE: DRII) is a self-proclaimed, “global leader in the hospitality and vacation ownership industries, with a worldwide network.” As such it has more than 400 “vacation destinations” in more than 30 countries around the world and sells “vacation ownership points,” which allow members to book rooms at its properties.

Diamond was founded in 2007 and “went public” five years later. It was a publicly held company until Apollo acquired it on September 2, 2016. Apollo has owned and controlled Diamond and all of its affiliates since then.

Summary of Facts

Diamond and nine of its current and former officers and directors now stand accused of deceiving shareholders by lying or withholding critical information related to certain transactions during the time in question.

Specifically, they are accused of omitting truthful information from a Recommendation Statement filed with the SEC. They are also accused of withholding information about offers made to certain Diamond board members “during the pendency of the Tender Offer.” By doing so, they allegedly enticed shareholders to tender their shares at an unfair price.

The truth emerged in a series of events that began on August 31, 2016, with internal confirmation that Apollo had hired the chairman of Diamond’s board of directors as a consultant, and September 2, 2016, when Apollo officially acquired the Company.

A closer look…

According to the July 23 complaint, private equity firm Apollo Global Management LLC in January 2016 “approached Diamond to discuss a potential take-private transaction in which Diamond, then a publicly-traded company, would be converted into a private company.”

Following a series of events, on June 23, 3016, Apollo submitted what turned out to be the winning bid for the acquisition of Diamond at $30.25 per share.

Then on June 26, 2016, the Diamond board voted to approve Apollo’s acquisition of the Company, even though the chairman abstained.

Then, on July 14, 2016, the defendants allegedly “caused a materially incomplete and misleading Recommendation Statement to be filed with the SEC.” In it, they “recommended that shareholders tender their shares pursuant to the Tender Offer, stating that the $30.25 offer price was fair and advisable.”

What they failed to disclose in the statement, however, was that “the Board’s Chairman had abstained from voting on the sale of Diamond for reasons that directly contradicted the Board’s recommendation to the stockholder.”

Furthermore, the defendants also filed  “materially incomplete and misleading Amendments to the Schedule 14D-9 dated August 9, 2016, and September 1, 2016” with the SEC. In them, they failed to disclose that Apollo had offered Diamond’s chairman “additional consideration for the deal in the form of a consulting agreement by Apollo;” and that “Apollo had offered financial incentives in the form of consulting agreements or co-investment opportunities” to Diamond’s vice-chairman and CEO.

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is September 24, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Diamond common stock using court approved loss calculations.

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Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action.  Please contact us if you would like an LK report for any of these cases:

About Us

Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse.  With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.

Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients.  Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.

For additional information about this case or our institutional services, please contact us.