This is a securities fraud class action lawsuit against Pzena Investment Management, Inc. and certain officers and directors and underwriters alleging that in the Pzena's initial public offering which commenced on October 24, 2007, Pzena made materially misleading statements.
Pzena is an investment advisor and generates its revenues from earning management fees and incentive fees, which are referred to as advisory fees, by managing investment assets. Pzena's advisory fees are primarily driven by the level of the amount of funds under management ("AUM"). Pzena's AUM increases or decreases with the net inflows or outflows of funds into the various investment strategies and with the performance of the investments therein. At the time of the IPO, Pzena's revenues from earned advisory fees largely came from investment services Pzena provided to the John Hancock Classic Value Fund. At the IPO there existed a growing and alarming pattern of net redemptions in the the John Hancock Classic Value Fund. Pzena failed to disclose this sufficiently during its IPO and in fact explicitly stated "we have recently re-opened our Large Cap Value, Value Service, Small Cap Value, Mid Cap Value and All Cap Value strategies, primarily as a result of the growth in their respective investable universes.
The subsequent disclosure of the large redemptions in the John Hancock Classic Value Fund three weeks after the IPO resulted in the price of the Pzena's common stock declining, causing investors to suffer damages.
Name (Stock Symbol)
Pzena Investment Management, Inc. (PZN)
Pzena Investment Management, Inc. is the holding company of Pzena Investment Management, LLC, an investment management firm.
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