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HearUSA, Inc. Securities Litigation

MTB Investment Partners LP v. Siemens Hearing Instruments Inc.
No. 2:12-cv-00340 (D.N.J.)
May 2014

On January 18, 2012, Hausfeld filed a securities class action lawsuit against Siemens Hearing Instruments ("Siemens") on behalf of investors who sold HearUSA common stock between January 18, 2011 and July 31, 2011, inclusive. The lawsuit alleges that Siemens - HearUSA's largest shareholder, creditor, and supplier - issued fraudulent statements in its Schedule 13D filings with the Securities and Exchange Commission ("SEC") in an attempt to artificially suppress the price of HearUSA common stock. Further, the complaint alleges that as a result of Siemens' false and misleading statements, HearUSA's common stock plummeted, falling in value from $0.90/share on January 18, 2011 to $0.35/share on July 28, 2011. Consequently, numerous investors sold their common stock at a huge loss. This lawsuit seeks recovery from Siemens on behalf of those investors.

The District of New Jersey appointed MTB Investment Partners lead plaintiff and Hausfeld lead counsel on May 18, 2012; Hausfeld filed an amended complaint on June 1, 2012. On February 19, 2013, the Court denied Defendant's motion to dismiss in part, concluding that the complaint state a claim under Section 10(b) and 18(a) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder. On September 26, 2013, the parties notified the Court that they had reached an agreement in principle to settle the litigation.

The lawsuit alleges violations of Sections 10(b), 9(a)(2) and 18(a) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b), 78i(a)(2), and 78r(a)] and Rule 10b-5 promulgated thereunder by the SEC [17 C.F.R. § 240.10b-5]. According to the complaint, Siemens misled the investing public by stating, in its Schedule 13Ds, that (1) Siemens at no point had the intention to acquire HearUSA when, in fact, Siemens had been in the advanced stages of a negotiated buyout process for HearUSA code named "Project Harmony", (2) HearUSA indicated that it could not pay amounts allegedly owed to Siemens when, in fact, HearUSA made clear in multiple written and verbal correspondences with Siemens that this characterization was not accurate; (3) Siemens' path forward with HearUSA depended on recently requested financial information when, in fact, Siemens had this information for months and had already analyzed it; and (4) Siemens, if it wanted to acquire HearUSA, could do so at no consideration to shareholders when, in fact, Siemens did not have the ability to acquire HearUSA without cashing-out shareholders under the terms of the parties' credit agreement. The complaint alleges that, in making these statements, Siemens effectively told the market that HearUSA stock was worthless, and the market responded accordingly. The complaint further alleges that although HearUSA was driven into bankruptcy as a result of Siemens' predatory actions, HearUSA was able to interest a Siemens rival in its acquisition. Consequently, Siemens was compelled to pay an amount of money that was much closer to, but still less than, HearUSA's fair market value when it acquired HearUSA at a bankruptcy auction on August 1, 2011.

For more information, please contact William Butterfield or Timothy Kearns.

Practice Areas: Securities and Financial Services

 

Supporting Documents

» Order Appointing Lead Counsel (PDF)
» HearUSA First Amended Complaint (PDF)
» HearUSA Complaint Exhibit A (PDF)
» HearUSA Complaint Exhibit B (PDF)
» HearUSA Complaint Exhibit C (PDF)

 

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