Rocket Fuel, Directors Face Securities Lawsuit

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A stockholder has filed suit against Rocket Fuel Inc. and its board of directors over allegations that they failed to disclose to the public required information concerning a proposed merger between the company and Sizmek Inc. The plaintiff believes the transaction, announced August 2, 2017, offers a price that undervalues the company and the prices previously proposed during negotiations. He notes that the company’s board of directors stand to receive significant benefits from the transaction, including accelerated vesting of company stock, hefty bonuses, and “Golden Parachute payments.” The plaintiff claims the company’s Registration Statement is missing information concerning the communications that produced these benefits. From the complaint:

“Communications regarding post-transaction employment and merger related benefits during the negotiation of the underlying transaction must be disclosed to stockholders that are trying to understand the motivations that could potentially influence or prevent fiduciaries from acting solely in the best interests of the Company.” 

Moreover, the suit argues the defendants failed to release information concerning figures used in the valuation analyses performed by Rocket Fuel’s financial advisor. Without this information, the plaintiff says, stockholders are unable to determine for themselves whether the deal is fair.