Class Action Takes Aim at CPI
CPI Card Group has been targeted in a new class action lawsuit over claims the card manufacturing and fulfillment specialist failed to disclose important information to shareholders in the run-up to its IPO last year.
According to a complaint filed in U.S. District Court for the Southern District of New York, CPI’s Registration Statement ahead of its October 2015 IPO failed to disclose that the company’s biggest card issuer clients were “significantly over-inventoried” with EMV-equipped cards. As a result of the backlog, “CPI’s largest customers would significantly reduce their purchases from CPI in the fourth quarter of 2015, the remainder of fiscal year 2015 and fiscal year 2016,” according to Robbins Arroyo LLP, one of the law firms soliciting CPI shareholders to join the suit. Because the backlog meant those customers would reduce future card purchases, the company’s failure to disclose the issue to potential shareholders was negligent, the complaint alleges.
“We believe the lawsuit to be without merit, intend to defend against it vigorously and otherwise do not comment on litigation matters,” CPI said in a statement.
Taking place shortly after the EMV liability shift in the U.S., the IPO raised $172.5 million for Littleton, Colo.-based CPI, which counts among its customers major card issuers including JPMorgan Chase, Bank of America, American Express, InComm, Green Dot and Blackhawk Network.