Pomerantz LLP was appointed Lead Counsel in a class action lawsuit against PayPal Holdings, Inc. (“PayPal” or the “Company”) and certain of its officers. The class action, filed in United States District Court, for the Northern District of California, and docketed under 17-cv-06956, is on behalf of a class consisting of investors who purchased or otherwise acquired common shares of PayPal between February 14, 2017 and December 1, 2017, both dates inclusive (the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
PayPal operates as a technology platform company that provides online payment systems through a variety of services on behalf of consumers and merchants. On February 14, 2017, PayPal announced an agreement to purchase TIO Networks Corp. (“TIO”) for $233 million (the “TIO Acquisition”). TIO is a bill-pay management company that processed roughly $7 billion in bill payments on behalf of 14 million customers in 2016. On July 18, 2017, PayPal announced the completion of the TIO Acquisition.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) TIO’s data security program was inadequate to safeguard the personally identifiable information of its users; (ii) the foregoing vulnerabilities threatened continued operation of TIO’s platform; (iii) PayPal’s revenues derived from its TIO services were thus unsustainable; (iv) consequently, PayPal had overstated the benefits of the TIO Acquisition; and (v) as a result, PayPal’s public statements were materially false and misleading at all relevant times.
On November 10, 2017, PayPal suspended its TIO services, pending a security review, stating that it had discovered security vulnerabilities on the TIO platform and that the TIO data security program did not meet PayPal’s standards.
On December 1, 2017, post-market, PayPal disclosed that personally identifiable information—including names, addresses, bank-account details, and Social Security numbers—for roughly 1.6 million TIO users had potentially been compromised as a result of the previously announced security vulnerabilities.
On this news, PayPal’s share price fell $4.33, or 5.75%, to close at $70.97 on December 4, 2017, the following trading day.