Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against Root, Inc.
NEW YORK--(BUSINESS WIRE)--Mar 25, 2021--
Robbins Geller Rudman & Dowd LLP ( https://www.rgrdlaw.com/cases-root-inc-class-action-lawsuit.html ) today announced that it filed a class action seeking to represent purchasers of Root, Inc. (NASDAQ:ROOT) Class A common stock pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with Root’s October 29, 2020 initial public stock offering (the “IPO”). This action was filed in the Southern District of Ohio and is captioned Kitzler v. Root, Inc., No. 21-cv-1301.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Root common stock pursuant to the IPO to seek appointment as lead plaintiff in the Root class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Root class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Root class action lawsuit. An investor’s ability to share in any potential future recovery of the Root class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the Root class action lawsuit, you must move the Court no later than 60 days from March 19, 2021. If you wish to discuss the Root class action lawsuit or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Mary K. Blasy of Robbins Geller, at 800/449-4900 or 631-454-7719 or via e-mail at firstname.lastname@example.org. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-root-inc-class-action-lawsuit.html.
The Root class action lawsuit charges Root and certain of its executives and directors, as well as the underwriters of the IPO with violations of the Securities Act of 1933. Root is a Columbus, Ohio-based insurance carrier that uses a smartphone-administered driving test and an algorithm to price auto insurance premiums. Using telematics data, the app purportedly tracks 200 factors and tabulates the data to offer the driver a personalized quote for insurance. Root’s demographic target are those drivers with better driving habits, which Root represents are over-paying for insurance based on their below-average propensity to be involved in accidents.
The complaint alleges that the IPO’s offering documents were negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Specifically, the complaint alleges that at the time of the IPO: (i) Root had been paying on average at least $600 per customer in customer acquisition costs, far exceeding the $332 per customer claimed in the offering documents; (ii) Root’s increased customer acquisition costs would continue to remain elevated as it sought to aggressively expand its business into more states; and (iii) as a result of the foregoing, Root was not on track to achieve the operational or financial results represented in the Registration Statement and Prospectus used to market the IPO.
Following the IPO, investors learned through a series of disclosures that Root had been paying significantly higher customer acquisition costs at the time of the IPO, with a stock research analyst with one of the underwriters in the IPO lamenting in a November 2020 report that Root could not continue to bear the increased customer acquisition costs and would instead be forced to raise additional capital to survive. Then in February 2021, Root reported much larger losses for fiscal 2020 than the market had been led to expect. On March 9, 2021, another stock research analyst reported that Root would not be cash flow positive until 2027 and would thus “require not insignificant cash infusions from the capital markets to bridge its cash flow needs.” The market price of Root Class A common stock has since declined and now trades more than 50% below the $27 per share IPO price.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
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CONTACT: Robbins Geller Rudman & Dowd LLP
Mary K. Blasy, 800-449-4900
KEYWORD: NEW YORK UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: LEGAL PROFESSIONAL SERVICES
SOURCE: Robbins Geller Rudman & Dowd LLP
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PUB: 03/25/2021 08:00 PM/DISC: 03/25/2021 08:00 PM