The underwriters for Root Inc.’s IPO obtained the dismissal of litigation brought by a putative class of shareholders arising from the insurance company’s offering in 2020. The underwriters were Goldman Sachs & Co., Morgan Stanley & Co., Barclays Capital and Wells Fargo Securities.
The plaintiffs claimed that Root’s registration statement contained false or misleading statements concerning its customer acquisition cost advantages over its competitors, which, at the time of the IPO, had supposedly diminished due to a national marketing campaign. Plaintiffs asserted claims under Sections 11 and 12(a)(2) of the Securities Act of 1933 against the underwriters, as well as claims under Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 against Root and certain former officers.
On March 31, the U.S. District Court for the Southern District of Ohio granted a motion to dismiss with prejudice as to all claims brought against the underwriters, as well as all claims against Root and certain former officers. Among other things, the court found that certain alleged misstatements were “forward-looking” and not actionable and were coupled with meaningful cautionary language.
The S&C team representing the underwriters included Sharon Nelles, Andrew Finn and Peter Pai.