Vuzix Corporation (VUZI) Accused of Using Illegal Stock Promotion Tactics
According to the filed shareholder derivative complaint against the company’s officers and directors for breaches of their fiduciary duties from November 3, 2016 to the present, Vuzix conducted a secondary offering (“SPO”) on January 26, 2018, for $10 per share, raising approximately $28.4 million to be used for general corporate purposes, including expanding Vuzix’s product lines. Prior to the SPO, Vuzix heavily touted its Vuzix Blade Smart Glasses (“The Blade”), noting that the device received four innovation awards at the Consumer Electronics Show in January 2018. In March 2018, a report alleged that Vuzix illegally used stock promotion tactics to boost Vuzix’s share price prior to the SPO. The report called The Blade “little more than a low tech mock-up which serves as a prop for journalists to conduct sham reviews.” On this news, Vuzix’s stock fell more than 22% to close at $5.95 per share on March 21, 2018.
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