A South Carolina company that makes 3D printers is paying its investors $50 million after executives predicted massive growth — and it never came.
The company, Rock Hill-based 3D Systems, agreed to settle with its shareholders after three years of legal wrangling. Investors accused the company of being misleading in 2015, after a year and a half of steep losses on Wall Street, and its stock has continued to slump since.
The $50 million deal is thought to be one of the largest payouts made in a securities fraud case in South Carolina history, according to Motley Rice, the Mount Pleasant law firm that brought the case. But the deal, which was recently approved by a federal judge, covers only a sliver of the billions of dollars of value lost by shareholders.
3D Systems is still among South Carolina’s largest publicly traded companies with a market valuation of about $1.6 billion. The company, which sought to have the lawsuit dismissed twice, didn’t respond to a request for comment on the settlement.
In a filing with the Securities and Exchange Commission, the company said insurance carriers are paying the $50 million.
The lawsuit brought by Motley Rice focuses on the fall of 2013, when hype for 3D printing was reaching a fever pitch.
3D Systems, a major player in an emerging industry, reported booming sales, and it told investors it planned to grow aggressively: Manufacturing capacity would triple. Metal printing would emerge as a new niche. Overall sales could double in a few years.
Analysts were excited and highlighted lots of room for growth. Shares that had already quintupled over just a few years shot up another 50 percent. Until the hype began to deflate, sales growth slowed down, and the stock started tanking.
The lawsuit also says that two top executives who are no longer with 3D cashed out $4.5 million in stock while shares were high, and that the company sold $300 million of stock before it tumbled to its current levels.
The executives and 3D Systems were not charged with wrongdoing outside of the civil complaint.
The amount each each shareholder will be based on the number of formal claims that are filed and approved. The settlement is limited to investors who bought shares between October 2013 and May 2015.