The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Truecar. Inc. (“Truecar” or the Company) and certain of its senior executives, and directors. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired Truecar common stock during the Class Period.
TrueCar, a Delaware corporation with its headquarters in Santa Monica, California, is an internet-based company that purports to offer users market pricing on new and used cars, and connects users with its network of “TrueCar Certified Dealers.”
Specifically, the Complaint alleged that Defendants made false and misleading statements and/or failed to disclose : (1) negative developments concerning the Company’s relationship with the United Services Automobile Association (“USAA”), Truecar’s largest source of revenue; (2) that USAA had been planning and then made significant changes to its website that would have a material adverse effect on the volume of purchases generated by USAA; 3) that, as a result of the changes USAA made, TrueCar’s financial results and business operations were adversely affected; and (4) that certain Defendants engaged in insider trading, selling Truecar stock at artificially inflated prices during the Class Period. Then on November 6, 2017, when the Company released its earnings for the third quarter, Defendants were forced to reveal the truth. TrueCar reported that, rather than experiencing record unit growth, the Company’s sales units attributable to USAA had declined by 5%, meaning the Company could not meet the guidance it had issued only three months prior. Defendants admitted for the first time that this shortfall was attributable to substantial changes USAA had made to the co-branded car buying website—causing “a decline in traffic, prospects, and units on USAA.” On this news, TrueCar’s s declined by $5.76 per share, or 35.25%, to close at $10.58 per share on November 7, 2017.
On June 27, 2018, the court appointed Oklahoma Police Pension and Retirement Fund as Lead Plaintiff and Saxena White, P.A. as Lead Counsel.
Lead Plaintiff filed its Amended Complaint on August 24, 2018. After Defendants’ Motion to Dismiss was fully briefed, on February 5, 2019, the Court denied the motion in its entirety. The Court found that that Defendants made materially false and misleading statements “by making risk statements regarding TrueCar’s reliance on USAA’s website without alerting the public that the risk had already come to fruition” and “representing that USAA would be a key driver of unit and revenue growth in 2017.”
Throughout discovery, Saxena White reviewed approximately 3.5 million pages of documents in eight separate productions over the course of approximately two months. Conducting this discovery required a monumental effort given the expedited court schedule. Additionally, Saxena White reviewed approximately 78,000 pages of documents produced by USAA. On March 8, 2019, Lead Plaintiff filed a Motion for Class Certification, and the Court granted Plaintiff’s motion on May 9, 2019.
On June 5, 2019, the Parties participated in mediation. Thereafter, the Parties continued negotiations, eventually reaching an agreement to settle the claims for $28,250,000 for the benefit of the Class. On October 15, 2019, the Court preliminarily approved the settlement, and then on May 26, 2020, entered a final judgment finding the settlement to be fair, adequate and reasonable in a respects.