Wong v. Arlo Technologies, Inc., et al.

Case No. 5:19-cv-00372-BLF

United States District Court of California San Jose Division

Proposed Plan of Allocation

A proposed Plan of Allocation has been prepared by Lead Plaintiff and Class Counsel. The objective of the Plan of Allocation is to distribute equitably the Settlement proceeds to the members of the Settlement Class who allegedly suffered losses as a result of the alleged violations of the federal securities law.

Under the Plan of Allocation, a Settlement Class Member who mails a timely and valid Proof of Claim, in accordance with the requirements established by the Court and which is approved for payment from the Settlement Fund, shall be deemed an “Authorized Claimant.” The Settlement Administrator shall determine each Authorized Claimant’s share of the Net Settlement Fund based upon a recognized loss formula (the “Recognized Loss”) described below. A Recognized Loss will be calculated for each share of Arlo common stock purchased or otherwise acquired during the Class Period (i.e., August 3, 2018 through December 2, 2018, inclusive), including stock acquired pursuant and/or traceable to Arlo’s initial public offer on or about August 7, 2018 (the “IPO”). A Claimant’s “Recognized Claim” will be the sum of his, her, or its Recognized Loss Amounts as calculated above with respect to all shares of Arlo common stock.

The calculation of Recognized Loss will depend upon several factors, including when shares of Arlo common stock were purchased or otherwise acquired, and for what amounts, and whether those shares were sold, and if sold, when they were sold, and for what amounts. The calculations of Recognized Loss are not intended to be estimates of, nor indicative of, the amounts that Settlement Class Members might have been able to recover at trial. Nor are the calculations of Recognized Loss intended to be estimates of the amounts that will be paid to Authorized Claimants pursuant to the Settlement. The calculations of Recognized Loss are only a method to weigh the claims of Authorized Claimants against one another for the purposes of making pro rata allocations of the Net Settlement Fund. The Settlement Administrator will use its best efforts to administer and distribute the New Settlement Fund to the extent that it is equitably and economically feasible.

The Plan of Allocation reflects the assumption that the price of Arlo common stock was artificially inflated during the Class Period. The computation of the estimated alleged artificial inflation in the price of Arlo’s common stock is based on certain misrepresentations alleged by Lead Plaintiff and the decline in the price of Arlo common stock in reaction to public announcements that allegedly corrected the alleged misrepresentations. Lead Plaintiff and Class Counsel have determined that such price declines occurred on October 26, 2018, and December 3, 2018 (the “Corrective Disclosure Dates”).

Federal securities laws allow investors to recover for losses caused by disclosures that corrected Defendants’ misleading statements or omissions. Thus, in order to have been damaged by the alleged violations of the federal securities laws, Arlo common stock purchased or otherwise acquired during the Class Period must have been held until its price declined due to the disclosure of information which corrected an allegedly misleading statement or omission. Accordingly, if Arlo common stock was sold before October 26, 2018 (the earliest Corrective Disclosure Date), the Recognized Loss for such shares is $0.00, and any loss suffered is not compensable under the federal securities laws. Likewise, if Arlo common stock was purchased and sold between the two Corrective Disclosures Dates (i.e., October 26, 2018 and December 3, 2018), the Recognized Loss for such shares is $0.00.

The Recognized Loss per Share of Arlo common stock will be calculated as set forth below.

  1. For each share of Arlo common stock purchased or otherwise acquired before the close of trading on October 25, 2018, and sold before or at the close of trading on October 25, 2018, the Recognized Loss will be $0.00;
  2. For each share of Arlo common stock purchased or otherwise acquired before or at the close of trading on October 25, 2018, and sold after the close of trading on October 25, 2018, but before or at close of trading on December 2, 2018, the Recognized Loss will be the lesser of:
    1. $1.78;
    2. $16.00 minus the sale price; or
    3. the purchase price minus the sale price;
  3. For each share of Arlo common stock purchased or otherwise acquired before or at the close of trading on October 25, 2018, and sold after the close of trading on December 2, 2018, but fore or at the close of trading on December 10, 2018, the Recognized Loss will be the lesser of:
    1. $4.53;
    2. the purchase price (or $16.00, whichever is less) minus the sale price; or
    3. the purchase price minus the “bounce back” sale price set forth in Table 1;
  4. For each share of Arlo common stock purchased or otherwise acquired before or at the close of trading on October 25, 2018, and sold after the close of trading on December 10, 2018, or not sold at all, the Recognized Loss will be the lesser of:
    1. $4.53;
    2. the purchase price (or $16.00, whichever is less) minus the sale price (or $9.86, whichever is more); or
    3. the purchase price minus the “bounce back” sale price set forth in Table 1;
  5. For each share of Arlo common stock purchased or otherwise acquired after the close of trading on October 25, 2018, and sold before or at the close of trading on December 2, 2018, the Recognized Loss will be $0.00;
  6. For each share of Arlo common stock purchased or otherwise acquired after the close of trading on October 25, 2018, but before or at the close of trading on December 2, 2018, and sold after the close of trading on December 2, 2018, but before or at the close of trading on December 10, 2018, the Recognized Loss will be the lesser of:
    1. $2.75;
    2. the purchase price minus the sale price; or
    3. the purchase price minus the “bounce back” sale price set forth in Table 1;
  7. For each share of Arlo common stock purchased or otherwise acquired after the close of trading on October 25, 2018, but before or at the close of trading on December 2, 2018, and sold after the close of trading on December 10, 2018, or not sold at all, the Recognized Loss will be the lesser of:
    1. $2.75;
    2. the purchase price minus the sale price (or $9.86, whichever is higher); or
    3. the purchase price minus the “bounce back” sale price set forth in Table 1.

Table 1 (“Bounce Back” Sale Price)

Date/PriceDate/Price
2018-12-039.282019-01-179.11
2018-12-049.042019-01-189.06
2018-12-069.012019-01-229.01
2018-12-079.022019-01-238.96
2018-12-109.132019-01-248.91
2018-12-119.252019-01-258.85
2018-12-129.292019-01-288.80
2018-12-139.342019-01-298.75
2018-12-149.402019-01-308.70
2018-12-179.432019-01-318.67
2018-12-189.462019-02-018.64
2018-12-199.482019-02-048.60
2018-12-209.492019-02-058.58
2018-12-219.482019-02-068.47
2018-12-249.462019-02-078.36
2018-12-269.492019-02-088.26
2018-12-279.562019-02-118.16
2018-12-289.632019-02-128.07
2018-12-319.642019-02-137.98
2019-01-029.672019-02-147.90
2019-01-039.642019-02-157.81
2019-01-049.612019-02-197.73
2019-01-079.582019-02-207.66
2019-01-089.522019-02-217.60
2019-01-099.452019-02-227.53
2019-01-109.392019-02-257.47
2019-01-119.332019-02-267.41
2019-01-149.262019-02-277.35
2019-01-159.202019-02-287.30
2019-01-169.152019-03-017.25
after7.25

For purpose of the above calculations, a purchase or sale of common stock shall be deemed to have occurred on the “contract” or “trade” date as opposed to the “settlement” or “payment” date. All purchase and sale prices shall exclude any fees, taxes, and commissions. If a Settlement Class Member made more than one purchase/acquisition or sale of Arlo common stock during the Class Period, all purchases/acquisitions and sales of common stock will be matched on a First In, First Out (“FIFO”) basis. Class Period sales will be matched first against any holdings of Arlo common stock at the beginning of the Class Period, and then against purchases/acquisitions of Arlo common stock in chronological order, beginning with the earliest purchase/acquisition made during the Class Period. A Recognized Loss cannot be less than zero.

The payment you will receive will reflect your proportionate share of the Net Settlement Fund. The Settlement Administrator shall allocate to each Authorized Claimant a pro rata share of the Net Settlement Fund based on his, her, it its Recognized Claim as compared to the Recognized Claim of all Authorized Claimants.

Any amounts remaining in the Net Settlement Fund after all distributions of the Net Settlement Fund to Authorized Claimants have been made pursuant to this Plan of Allocation, including without limitation such Authorized Claimants’ uncashed or returned distributions within ninety (90) days of distribution, shall be disbursed per Class Counsel’s direction, as approved by the Court, in the form of an additional distribution to members of the Class. Defendants retain no interest in or right to any residual amount remaining in the Settlement Fund.

SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES

If you hold or held securities covered by the Action on behalf of a beneficial owner or in “street name,” you are directed by the Court to provide this Notice to the beneficial owner. You may obtain additional copies of this Notice by contacting the Angeion Group, the Settlement Administrator, at the address or telephone number below. As an alternative, you may provide the Settlement Administrator with mailing lists of beneficial owners. Please contact the Settlement Administrator immediately upon receipt of this Notice.

If you verify and provide details about your assistance with either of these options, you may be reimbursed for the actual expense you incur to mail the Notices, including postage and/or the reasonable cost of determining the names and addresses of beneficial owners. The Settlement Administrator will send you a form for the verification. Mail or e-mail any requests for reimbursement, along with appropriate supporting documentation, to: Arlo Securities Litigation, Attn: Broker Requests, 1650 Arch Street, Suite 2210, Philadelphia, PA 19130, info@ArloSecuritiesLitigation.com (preferred).

PLEASE DO NOT CALL THE COURT OR COURT CLERK FOR INFORMATION.