Fitbit Can’t Run From Case on ‘Paranoia'-Induced Inside Trades

Fitbit Inc. is stuck in court after a Delaware judge Dec. 14 refused to dismiss a shareholder derivative suit alleging the company’s board engaged in insider trading.

Publicly lauded but privately lackluster technology “caused ‘paranoia’ among Fitbit management,” leading them to structure the company’s 2015 IPO and secondary offering to allow them to sell additional stock at higher prices, according to a Delaware Court of Chancery opinion keeping the case in court.

The Fitbit board urged the court to throw out the case because the investors didn’t make a pre-suit demand on the board. But the investors “have pled particularized ...