VUZI Lawsuit; Vuzix Class Action Litigation Report/Update
Levi & Korsinsky, LLP
August 2, 2018
McDonel v. Vuzix Corporation et al 1:18-cv-06656 – On July 24, 2018, investors sued Vuzix Corporation (Vuzix, VUZI, or the Company) in United States District Court, Southern District of New York. Plaintiffs in the Vuzix class action allege that they either acquired Vuzix stock at artificially inflated prices between November 9, 2017 and March 20, 2018 (“the Class Period”) or in connection with the Company’s secondary public offering (“SPO”) in January 2018. They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during the time in question. For more information on the VUZI Lawsuit, please inquire within.
Summary of the Allegations
The Company (NASDAQ: VUZI) has been in business since 1997 and bills itself as “a leading supplier of Smart-Glasses and Augmented Reality (AR) technologies and products for the consumer and enterprise markets.”
As such, it makes “personal display and wearable computing devices that offer users a portable high quality viewing experience, provide solutions for mobility, wearable displays and virtual and augmented reality.” It also designs, markets and sells these products.
On its website, Vuzix claims it holds more than 60 patents and has more than 40 that are pending.
Summary of Facts
The Company and two of its two of its senior officers and/or directors (the “Individual Defendants”) are accused of deceiving investors by lying and withholding critical information about certain business practices during the Class Period.
Specifically, they are accused of omitting truthful information about the use of certain strategies to promote its stock from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Vuzix stock to trade at artificially inflated prices during the time in question.
The truth emerged in a series of posts published by MOX Reports in March 2018. In them, MOX Reports accused the Company of wrongfully using “certain stock promotion tactics to boost the Vuzix share price, and then offered shares at $10 per share.” It said in pertinent part: “Vuzix recently used an undisclosed stock promotion involving dozens of mainstream media outlets to artificially inflate the share price and volume, and then raise $30 million.”
A closer look…
As alleged in the July 24 complaint, Vuzix repeatedly made false and misleading public statements during the Class Period.
For example, in a press release issued on November 9, 2017, Vuzix discussed its financial results for the third quarter of 2017. It stated in relevant part: “Recognized $266,687 of engineering services revenues during the third quarter on our enterprise smart glasses development project with Toshiba. The remaining development work associated with Toshiba is expected to be completed in the fourth quarter, which will result in approximately $221,000 of revenue in the fourth quarter and the delivery of PVT devices. Vuzix expects to move this new product into volume production for Toshiba in early 2018.”
On the same day, the Company filed a form with the SEC in which it reiterated the same points it made in the press release.
Finally, on a form filed with the SEC on March 6, 2018, the Company said in relevant part: “The Vuzix Blade received 4 innovation awards at CES and was named ‘Best of CES’ by several notable media firms including TIME, Rolling Stone, CNET, Fox News, Tom’s Guide and TechRadar.”
According to the MOX reports, however: “The information contained in the articles and product reviews was flat out wrong, but was then repeatedly rebroadcast by Vuzix (esp. Margolis) in order to inflate the stock. Margolis made heavy use of social media, adding the $VUZI ticker next to the sponsored articles.”
Impact of the Alleged Fraud on Vuzix’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price following disclosures:
|Three-day stock price decrease (percentage) as a result of disclosures:
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 Vuzix common stock using court approved loss calculation methods.
Recently Filed Cases
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:
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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.
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