Verified Shareholder Derivative Complaint

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A Verified Shareholder Derivative Complaint filed January 26, 2024 as Document 1 in Case 1:24-cv-00598-UA in the U.S. District Court for the Southern District of New York by Guillermo Marti and Felicia Marti JT Ten, derivatively on behalf of nominal defendant LivePerson, Inc., against Robert LoCascio, John Collins and other current or former directors and officers. The complaint asserts breaches of fiduciary duty, unjust enrichment, abuse of control, waste of corporate assets and violations of Sections 10(b), 20(a) and 14(a) of the Exchange Act for a Relevant Period from May 10, 2022 to March 16, 2023. It alleges that defendants failed to disclose that Medicare reimbursements to subsidiary WildHealth under a COVID-19 testing program had been suspended, and it recounts share price declines after later disclosures. The 71-page complaint includes a jury demand and two verifications.

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Case 1:24-cv-00598-UA Document 1 Filed 01/26/24 Page 1 of 71

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
GUILLERMO MARTI and FELICIA MARTI JT
TEN, derivatively on behalf of
LIVEPERSON, INC.,

Case No.:

Plaintiffs,
DEMAND FOR JURY TRIAL

v.
ROBERT LOCASCIO, JOHN COLLINS, PETER
BLOCK, ERNEST CU, BRUCE HANSEN, JILL
LAYFIELD, KEVIN C. LAVAN, FRED
MOSSLER, VANESSA PEGUEROS, WILLIAM
G. WESEMANN, and YAEL ZHENG,
Defendants,
and
LIVEPERSON, INC.,
Nominal Defendant.

VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT
Plaintiffs Guillermo Marti and Felicia Marti JT Ten (“Plaintiffs”), by Plaintiffs’
undersigned attorneys, derivatively and on behalf of Nominal Defendant LivePerson, Inc.
(“LivePerson” or the “Company”), file this Verified Shareholder Derivative Complaint against
defendants Robert LoCascio (“LoCascio”), John Collins (“Collins”), Peter Block (“Block”),
Ernest Cu (“Cu”), Bruce Hansen (“Hansen”), Jill Layfield (“Layfield”), Kevin C. Lavan
(“Lavan”), Fred Mossler (“Mossler”), Vanessa Pegueros (“Pegueros”), William G. Wesemann
(“Wesemann”), and Yael Zheng (“Zheng”) (collectively, the “Individual Defendants” and with
LivePerson, “Defendants”) for breaches of their fiduciary duties as directors and/or officers of


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LivePerson, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets,
violations of Sections 10(b), 20(a), and 14(a) of the Securities Exchange Act of 1934 (the
“Exchange Act”), and against Defendants LoCascio and Collins for contribution under Sections
10(b) and 21D of the Exchange Act. As for Plaintiffs’ complaint against the Individual Defendants,
Plaintiffs allege the following based upon personal knowledge as to Plaintiffs and Plaintiffs’ own
acts, and information and belief as to all other matters, based upon, inter alia, the investigation
conducted by and through Plaintiffs’ attorneys, which included, among other things, a review of
the Defendants’ public documents, conference calls and announcements made by the Defendants,
United States Securities and Exchange Commission (“SEC”) filings, wire and press releases
published by and regarding LivePerson, legal filings, news reports, securities analysts’ reports and
advisories about the Company, and information readily obtainable on the Internet. Plaintiffs
believe that substantial evidentiary support will exist for the allegations set forth herein after a
reasonable opportunity for discovery.
NATURE OF THE ACTION
1.

This is a shareholder derivative action that seeks to remedy wrongdoing committed

by LivePerson’s directors and officers and/or former directors and officers from May 10, 2022 to
March 16, 2023, inclusive (the “Relevant Period”).
2.

LivePerson is a Delaware corporation based in New York City that provides online

and mobile messaging solutions through conversational artificial intelligence. Since November
1998, LivePerson has offered online and mobile messaging solutions for businesses, purportedly
providing businesses with “conversational solutions to orchestrate humans and AI, at scale, and

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create a convenient and personalized relationship with their customers.” The Company went public
via an initial public offering (“IPO”) on the NASDAQ Stock Market (“NASDAQ”) in April 2000.
3.

LivePerson’s “Conversational Cloud” enables customers to interact with chat bots,

or automated internet chat robots, across “each of a brand’s primary digital channels, including
mobile apps, mobile and desktop web browsers, SMS, social media, and third-party consumer
messaging platforms.” This service purportedly allows human agents to manage customer
correspondence in a more streamlined and efficient manner, by giving customers solutions more
quickly via chat text as opposed to making them wait on hold on a phone call. LivePerson’s
Conversational Cloud also purports to “ingest traditional emails and convert them into messaging
conversations, or embed messaging conversations directly into web advertisements, rather than
redirect consumers to static website landing pages.”
4.

In February 2022, LivePerson acquired Kentucky-based WildHealth, Inc.

(“WildHealth”), a precision medicine service which purports to “leverage[] advanced machine
learning to combine DNA analysis, biometrics, microbiome testing and phenotypic data to provide
people with a blueprint for truly optimized health and a maximized health span.” Through its
business model, WildHealth frequently receives reimbursements from Medicare programs for
furnishing certain services.
5.

In November 2022—just months after LivePerson’s acquisition of WildHealth—

WildHealth was notified that certain reimbursements for its services provided under a Medicare
demonstration program pertaining to COVID-19 testing (the “Testing Program”) were suspended
pending further review. However, despite being aware of this, throughout the Relevant Period,
Defendants failed to disclose to investors that WildHealth’s Medicare reimbursements under the
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Testing Program had been suspended, instead representing to investors, inter alia, that the
Company “expect[ed] continued strong performance by WildHealth” and that there were no
material changes in the Company’s internal control over financial reporting.
6.

The truth began to emerge on February 28, 2023 when, before the market opened,

LivePerson issued a Notification of Late Filing on Form 12b-25 with the SEC for its Annual Report
on Form 10-K (the “2022 10-K”) for the fiscal year ended December 31, 2022 (the “2022 Fiscal
Year”). The Notification of Late Filing revealed that, due to the Company’s acquisition of
WildHealth, “the Company requires more time to perform additional review and testing of revenue
recognition with respect to a recently discontinued WildHealth program, for which Medicare
reimbursement is suspended pending further governmental review, and to complete its in-process
review of internal controls and procedures.”
7.

On this news, the Company’s share price fell $1.69 per share, or 14.31%, from a

closing price of $11.81 on February 27, 2023 to close at $10.12 per share on February 28, 2023.
8.

Just over a week later, before the market opened on March 6, 2023, LivePerson

filed a Form 8-K with the SEC which revealed that “the referenced review of WildHealth revenue
is anticipated to affect fourth quarter 2022 revenue attributable to WildHealth’s participation in a
Medicare demonstration program, due to suspension in November 2022 of Medicare
reimbursements under the program and pending further governmental review.”
9.

On this news, the Company’s share price fell $0.78 per share, or 6.8%, from a

closing price of $11.47 on March 6, 2023 to close at $10.69 per share on March 7, 2023.
10.

The truth continued to emerge on March 15, 2023 when, after the market had

closed, LivePerson issued a press release announcing the Company’s fourth quarter of 2022
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financial results. The press release revealed that “[t]otal revenue was $122.5 million for the fourth
quarter of 2022, a decrease of 1% as compared to the same period last year” and “[w]ithin total
revenue, business operations revenue for the fourth quarter of 2022 decreased 1% from the
comparable prior-year period to $113.0 million, and revenue from consumer operations decreased
3% from the comparable prior-year period to $9.4 million.”
11.

The truth fully emerged the following day, March 16, 2023, when, before the

market opened, the Company filed its 2022 10-K with the SEC. The 2022 10-K revealed that “due
to certain control deficiencies which aggregated to a material weakness in the Company’s internal
control over financial reporting as further described below, our disclosure controls and procedures
were not effective as of December 31, 2022” and “[t]he control deficiencies, which in aggregate
constitute a material weakness, were identified in connection with the Company’s previously
disclosed review of certain transactions related to its subsidiary WildHealth.”
12.

On this news, the Company’s share price went into free fall, dropping $5.64 per

share, or 57.73%, from a closing price of $9.77 per share on March 15, 2023 to close at $4.13 per
share on March 16, 2023.
13.

On July 12, 2023, the Company announced that Defendant LoCascio would depart

his role as LivePerson’s Chief Executive Officer (“CEO”), effective December 31, 2023 at the end
of the term of his contract, which would not be renewed. On August 8, 2023, the Company
announced that Defendant Collins, the Company’s Chief Financial Officer (“CFO”), had been
appointed to the additional role of interim CEO, and that, in connection with his appointment,
Defendant LoCascio had stepped down as CEO and as a Company director, effective August 7,
2023.
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14.

During the Relevant Period, the Individual Defendants breached their fiduciary

duties to the Company by personally making and/or causing the Company to make to the investing
public a series of materially false and misleading statements regarding the Company’s business,
operations, and prospects. Specifically, the Individual Defendants willfully or recklessly made
and/or caused the Company to make false and misleading statements that failed to disclose, inter
alia, that: (1) the Company’s internal controls pertaining to disclosure controls and procedures
were materially ineffective; (2) the Company failed to maintain internal controls over financial
reporting, as they contained material weaknesses; (3) as a result, the Company failed to disclose
the suspension of WildHealth’s Medicare reimbursements under the Testing Program and the
resulting impact on LivePerson’s future revenues; and (4) as a further result, the Company
exaggerated and overstated its business prospects and overall financial position. As a result of the
foregoing, Defendants’ statements about LivePerson’s business, operations, and prospects were
materially false and misleading and/or lacked a reasonable basis at all relevant times.
15.

The Individual Defendants also breached their fiduciary duties by failing to correct

and/or causing the Company to fail to correct these false and misleading statements and omissions
of material fact, while, during the Relevant Period, Defendant Collins sold Company shares at
inflated prices for total proceeds of over $4,445.
16.

In addition, during the Relevant Period, the Individual Defendants breached their

fiduciary duties by causing LivePerson to repurchase its own stock at prices that were artificially
inflated due to the foregoing misrepresentations. Approximately 19,830 shares of the Company’s
common stock were repurchased from Defendant Collins between November 1, 2022 and
November 30, 2022 for over $221,501. As the Company’s stock was actually only worth $4.13
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per share, the price at which it was trading when markets closed on March 16, 2022, the Company
overpaid for repurchases of its own stock by over $139,403 in total.
17.

Additionally, in breach of their fiduciary duties, the Individual Defendants caused

the Company to fail to maintain adequate internal controls.
18.

In light of the Individual Defendants’ misconduct—which has subjected the

Company, its former CEO, and its CFO/former Interim CEO/Chief Operating Officer (“COO”) to
a federal securities fraud class action lawsuit pending in the United States District Court for the
Southern District of New York (the “Securities Class Action”) and which has further subjected the
Company to the need to undertake internal investigations, the need to implement adequate internal
controls, losses from the waste of corporate assets, losses from the repurchases of Company stock
at artificially inflated prices due to the foregoing misrepresentations, and losses due to the unjust
enrichment of the Individual Defendants who were improperly overcompensated by the Company
and/or who benefitted from the wrongdoing alleged herein—the Company will have to expend
many millions of dollars.
19.

The Company has been substantially damaged as a result of the Individual

Defendants’ knowing or highly reckless breaches of fiduciary duty and other misconduct.
20.

In light of the breaches of fiduciary duty engaged in by the Individual Defendants,

most of whom are the Company’s current directors, of the collective engagement in fraud and
misconduct by the Company’s directors, of the substantial likelihood of the directors’ liability in
this derivative action, of the former CEO’s and CFO/interim CEO/COO’s liability in the Securities
Class Action, and of their not being disinterested and/or independent directors, a majority of the
Company’s Board of Directors (the “Board”) cannot consider a demand to commence litigation
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against themselves on behalf of the Company with the requisite level of disinterestedness and
independence.
JURISDICTION AND VENUE
21.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because

Plaintiffs’ claims raise a federal question under Section 14(a) of the Exchange Act (15 U.S.C.
§ 78n(a)(1)), Rule 14a-9 of the Exchange Act (17 C.F.R. § 240.14a-9), Sections 10(b) and 20(a)
of the Exchange Act (15 U.S.C. §§ 78j(b), 78t(a) and 78t-1), and SEC Rule 10b-5 (17 C.F.R. §
240.10b-5) promulgated thereunder, 15 U.S.C. § 78u-4(f), and Section 21D of the Exchange Act
(15 U.S.C. § 78u-4(f)). Plaintiffs’ claims also raise a federal question pertaining to the claims made
in the Securities Class Action based on violations of the Exchange Act.
22.

This Court has supplemental jurisdiction over Plaintiffs’ state law claims pursuant

to 28 U.S.C. § 1367(a).
23.

This derivative action is not a collusive action to confer jurisdiction on a court of

the United States that it would not otherwise have.
24.

Additionally, diversity jurisdiction is conferred by 28 U.S.C. § 1332. Plaintiffs and

Defendants are citizens of different states, and the amount in controversy exceeds the sum or value
of $75,000, exclusive of interest and costs.
25.

Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and 1401 because a

substantial portion of the transactions and wrongs complained of herein occurred in this District,
one or more of the Defendants either resides or maintains executive offices in this District,
Defendants have conducted business in this District, Defendants’ actions have had an effect in this
District, and LivePerson is headquartered in this District.
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Plaintiffs
26.

PARTIES

Plaintiffs are current shareholders of LivePerson. Plaintiffs have continuously held

LivePerson common stock since December 14, 2004. Plaintiffs are citizens of Costa Rica.
Nominal Defendant LivePerson
27.

LivePerson is a Delaware corporation with its principal executive offices at 475

10th Avenue, 5th Floor, New York, New York 10018. LivePerson’s shares trade on the NASDAQ
under the ticker symbol “LPSN.”
Defendant Block
28.

Defendant Block served as a Company director from 2010 until he resigned from

the Board on August 4, 2022. During his time as a director, Defendant Block served on the
Compensation Committee. According to the proxy statement the Company filed with the SEC on
July 21, 2022 (the “2022 Proxy Statement”), as of June 10, 2022, Defendant Block beneficially
owned 122,817 shares of the Company’s common stock. Given that the price per share of the
Company’s common stock at the close of trading on June 10, 2022 was $13.76, Defendant Block
owned approximately $1.7 million worth of LivePerson stock as of that date.
29.

For the fiscal year ended December 31, 2022 (the “2022 Fiscal Year”), Defendant

Block received $257,684 in total compensation from the Company, consisting entirely of stock
awards.
30.

The 2022 Proxy Statement stated the following about Defendant Block:

Mr. Block brings experience in management consulting and organizational
development, and has been President of Peter Block Inc., a management consulting
group, and a partner in Designed Learning, a training company that offers both inperson and virtual workshops designed by Mr. Block to build organizational
development skills, since 1997. Mr. Block is also a best-selling author of several
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books about organizational dynamics, community and accountability. Among other
awards, Mr. Block has received the Organizational Development Network’s
Lifetime Achievement Award, the American Society for Training and
Development Award for Distinguished Contributions, and the Association for
Quality and Participation President’s Award. He is also a member of Training
Magazine’s HRD Hall of Fame. Mr. Block holds a B.S. degree in Industrial
Administration from the University of Kansas and an M.S. degree in Industrial
Administration from Yale University.
Mr. Block brings to the Board significant expertise on hiring, enabling and retaining
talent, building high-performance internal teams and maintaining a diverse,
inclusive and engaged workforce and unique perspective on organizational design.
31.

Upon information and belief, Defendant Block is a citizen of Ohio.

Defendant Collins
32.

Defendant Collins has served as the Company’s CFO since February 2020 and as

the Company’s COO since January 10, 2024. Previously, Defendant Collins served as the
Company’s Interim CEO from August 7, 2023 until January 10, 2024 and as the Company’s Senior
Vice President of Quantitative Strategy from September 2019 until February 2020. According to
the proxy statement the Company filed with the SEC on September 8, 2023 (the “2023 Proxy
Statement”), as of August 11, 2023, Defendant Collins beneficially owned 83,860 shares of the
Company’s common stock. Given that the price per share of the Company’s common stock at the
close of trading on August 11, 2023 was $5.08, Defendant Collins owned approximately $426,009
worth of LivePerson stock as of that date.
33.

For the 2022 Fiscal Year, Defendant Collins received $4,408,986 in total

compensation from the Company. This included $506,250 in salary, $3,745,412 in stock awards,
$118,336 in non-equity incentive plan compensation, and $38, 988 in all other compensation.

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34.

During the Relevant Period, while the Company’s stock price was artificially

inflated and before the scheme was exposed, Defendant Collins made the following sale of
Company stock:
Date
November 1, 2022

Number of Shares
412

Avg. Price/Share
$10.79

Proceeds
$4,445

Thus, in total, before the fraud was exposed, he sold 412 shares of Company stock on inside
information, for which he received approximately $4,445 in proceeds. His insider sale, made with
knowledge of material nonpublic information before the material misstatements and omissions
were exposed, demonstrates his motive in facilitating and participating in the scheme.
35.

The 2023 Proxy Statement stated the following about Defendant Collins:

John D. Collins, 41, has served as our Interim Chief Executive Officer since August
2023 and our Chief Financial Officer since February 2020. Drawing on his
experience as a founder, data scientist, and institutional investor, John brings a
modern vision and skillset to his work. As CFO, he has played a critical role in
driving LivePerson’s corporate strategy and business development efforts,
including successfully executing M&A, divestiture, and capital markets
transactions. Mr. Collins joined LivePerson in September 2019 to lead the
development of automations and machine learning to support strategic decision
making and predictive analytics as SVP of Quantitative Strategy. In 2013, Mr.
Collins co-founded Thasos, a New York City-based predictive intelligence
company powering large-scale equity trading platforms. Mr. Collins served in
various capacities at Thasos, including, most recently, as an Advisory Board
Member, as its Chief Product Officer (2016–2019) and as its Portfolio Manager
(2013–2016). Prior to that, Mr. Collins held roles in the financial services industry,
including regulating financial firms at the NYSE, and structuring transactions in
leveraged finance at Credit Suisse. Mr. Collins received his J.D. from ChicagoKent College of Law at Illinois Institute of Technology, his M.B.A. from the
Massachusetts Institute of Technology, and his B.S. from the University of Central
Florida.
36.

Upon information and belief, Defendant Collins is a citizen of California.

Defendant Cu
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37.

Defendant Cu served as a Company director from April 2021 until he resigned from

the Board on February 7, 2023. He previously served as a member of the Social Impact and Culture
Committee. According to the 2022 Proxy Statement, as of June 10, 2022, Defendant Cu
beneficially owned 6,740 shares of the Company’s common stock. Given that the price per share
of the Company’s common stock at the close of trading on June 10, 2022 was $13.76, Defendant
Cu owned approximately $92,742 worth of LivePerson stock as of that date.
38.

For the 2022 Fiscal Year, Defendant Cu received $200,010 in total compensation

from the Company, consisting entirely of stock awards. 1
39.

The 2022 Proxy Statement stated the following about Defendant Cu:

Mr. Cu brings a long history of executive leadership experience, having served as
Executive Director, President and Chief Executive Officer of Globe Telecom, Inc.
(PSE: GLO), a major publicly traded telecommunications provider in the
Philippines, since April 2009, and as President and CEO of SPi Technologies from
1997 to 2008. He is considered to be one of the founding originators of the business
process outsourcing business model in the Philippines in recognition of his
immense contributions to the telecommunications industry. Mr. Cu also brings
valuable finance experience as a former executive at Bank of America and former
director of Maybank ATR Kim Eng Financial Corp. Mr. Cu has extensive
experience as a director of a variety of private companies, including AF Payments
(Beep), a financial services company. Mr. Cu has previously been recognized by
Ernst & Young as “ICT Entrepreneur of the Year,” and, on two occasions each, was
recognized by Finance Asia as the “Philippines’ Best CEO” and by Frost & Sullivan
as “CEO of the Year.” He was also recognized as one of the 100 most influential
telecom leaders worldwide by London-Based Global-Telecoms Business
Magazine’s Power 100 for five consecutive years. Mr. Cu holds a B.S. degree in
Industrial Management Engineering from De La Salle University in Manila and an
M.B.A. degree from the J.L. Kellogg Graduate School of Management at
Northwestern University.
Mr. Cu brings to the Board a global perspective in areas such as global contact
centers, infrastructure modernization, sustainability and product innovation, with
1

Defendant Cu had received $235,010 in total compensation from the Company for the 2022
Fiscal Year but returned his $35,000 in cash fees paid to him in 2022 in connection with his
resignation.
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particular expertise in telco communications and consumer offerings, and extensive
expertise in financial and operational management and business transformation.
40.

Upon information and belief, Defendant Cu is a citizen of the Philippines.

Defendant Hansen
41.

Defendant Hansen has served as a Company director since December 2022. He also

currently serves as a member of the Company’s Audit Committee and Operating Committee.
42.

The 2023 Proxy Statement stated the following about Defendant Hansen:

Mr. Hansen brings three decades of experience building companies across the
burgeoning big data, AI/analytics, and fintech industries to LivePerson. He
previously co-founded and served as Chairman and CEO of ID Analytics (now part
of LexisNexis Risk Solutions), a leader in consumer risk management software
solutions from 2002 to 2012. Prior to ID Analytics, Mr. Hansen was President at
HNC Software Inc., a global AI software provider in financial services, wireless,
and healthcare, which was acquired by FICO in 2002. Earlier in his career, he held
executive roles at Center for Adaptive Systems Applications (CASA) Inc.,
CitiGroup, ADP, and JPMorgan Chase. Currently, Mr. Hansen serves as board
chair at Verisk Analytics, Inc., which offers leading data analytics technology, and
board member at Mitek Systems, Inc., a provider of identity verification solutions.
Previously, Mr. Hansen served on the boards of RevSpring, Inc., a private company
providing consumer communications, billing, and payments solutions, GDS Link,
a private provider of customer-centric risk management and process automation
solutions, Performant Financial Corp, a healthcare payment integrity company, and
Zyme, a leading channel data management cloud platform that is now part of
E2Open. Mr. Hansen holds an M.B.A. in finance from The University of Chicago’s
Booth School of Business and an A.B. in economics from Harvard University.
Mr. Hansen brings to the Board management and operations experience gained as
a senior executive of multiple data analytics businesses, current and past service on
other public company boards, and a global perspective in areas such as product
innovation and technology expertise, with particular knowledge of AI and fintech.
43.

Upon information and belief, Defendant Hansen is a citizen of California.

Defendant Lavan
44.

Defendant Lavan has served as Company director since January 2000. He also

serves as a member of the Company’s Compensation Committee, Operating Committee, and Chair
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of the Company’s Audit Committee. According to the 2023 Proxy Statement, as of August 11,
2023, Defendant Lavan beneficially owned 189,041 shares of the Company’s common stock.
Given that the price per share of the Company’s common stock at the close of trading on August
11, 2023 was $5.08, Defendant Lavan owned approximately $960,328.28 worth of LivePerson
stock as of that date.
45.

For the 2022 Fiscal Year, Defendant Lavan received $267,510 in total

compensation from the Company. This included $67,500 in fees earned or paid in cash and
$200,010 in stock awards.
46.

The 2023 Proxy Statement stated the following about Defendant Lavan:

Mr. Lavan currently serves as Chief Financial Officer of Autoclear LLC, a designer,
builder and distributor of security systems, a role he has held since February 2016.
Prior to his current role, Mr. Lavan was an independent consultant to the media and
entertainment industries, building on his leadership experience across
entertainment, media and direct and digital marketing. Between April 2010 and
December 2014, Mr. Lavan was a Senior Vice President, Worldwide Controller of
IMG, an international and diversified sports, entertainment and media company.
He also served in various executive roles at Paradysz Matera Company, Inc.,
MDCPartners, Inc., Now Marketing, Inc. and Wunderman, a marketing division of
Young & Rubicam Inc., and previously served as an independent consultant to
marketing services organizations. While at Now Marketing, Inc., Mr. Lavan
invented NowCode, a product that was used in several television promotions
including by NBC for a sweepstakes for the 2002 Winter Olympics. Earlier in Mr.
Lavan’s career, he held various finance roles at Young & Rubicam, Viacom Inc.
and Viacom’s subsidiary, MTV Networks. Mr. Lavan holds a B.S. degree from
Manhattan College and is a Certified Public Accountant. Mr. Lavan brings to the
Board a highly relevant perspective in digital marketing and advertising, as well as
extensive operating and financial senior management experience.
47.

Upon information and belief, Defendant Lavan is a citizen of New Jersey.

Defendant Layfield
48.

Defendant Layfield has served as the Chair of the Board since July 2023 and as a

Company director since November 2016. She previously served as the Lead Independent Director.
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Defendant Layfield also serves as a member of the Company’s Audit Committee, Nominating and
Corporate Governance Committee, and as Chair of the Compensation Committee. According to
the 2023 Proxy Statement, as of August 11, 2023, Defendant Layfield beneficially owned 155,971
shares of the Company’s common stock. Given that the price per share of the Company’s common
stock at the close of trading on August 11, 2023 was $5.08, Defendant Layfield owned
approximately $792,333 worth of LivePerson stock as of that date.
49.

For the 2022 Fiscal Year, Defendant Layfield received $265,010 in total

compensation from the Company. This included $65,000 in fees earned or paid in cash and
$200,010 in stock awards.
50.

The 2023 Proxy Statement stated the following about Defendant Layfield:

Ms. Layfield has been Chair of the Board since July 2023 and previously served as
the Lead Independent Director. She has served as CEO of James Michelle Jewelry,
a digitally-native, direct-to-consumer, jewelry company since June of 2022. Ms.
Layfield co-founded Tamara Mellon, a digitally-native, luxury retail company,
where she served as CEO from July 2016 to December 2021 and assisted in
launching the first-ever digitally-led, direct-to-consumer luxury footwear brand.
From November 2004 until July 2016, Ms. Layfield served in various roles at
Backcountry.com, including as President and CEO from January 2011 to December
2015. During her time at Backcountry.com, she significantly grew the company
and successfully sold the business to TSG Consumer Partners for $350 million. Ms.
Layfield also held various marketing positions at several major Silicon Valley
companies. Ms. Layfield currently sits on the board of directors for The Orvis
Company. Additionally, Ms. Layfield previously sat on the boards of directors of
Camber Outdoors and SmartPak Equine. Ms. Layfield received a B.A. degree in
Communications—Journalism from Santa Clara University. Ms. Layfield is
recognized as an innovator and industry expert in combining organizational change
and advanced technologies to retool customer care for the digital, mobile era.
Ms. Layfield brings to the Board a deep experience in the retail and technology
sector, operational expertise and unique expertise transforming customer
experience and forging meaningful, high-quality connections between brands and
consumers.
51.

Upon information and belief, Defendant Layfield is a citizen of California.
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Defendant LoCascio
52.

Defendant LoCascio founded the Company in 1995. From 1995 until August 2023,

he served as the Company’s CEO and Chair of the Board, until he stepped down from both roles
effective August 7, 2023. According to the 2023 Proxy Statement, as of August 11, 2023,
Defendant LoCascio beneficially owned 5,193,207 shares of the Company’s common stock, or
7% of the total common stock outstanding of the Company as of that date. Given that the price per
share of the Company’s common stock at the close of trading on August 11, 2023 was $5.08,
Defendant LoCascio owned approximately $26.3 million worth of LivePerson stock as of that date.
53.

For the 2022 Fiscal Year, Defendant LoCascio received $2,955,255 in total

compensation from the Company. This included $611,820 in salary, $2,055,481 in stock awards,
$260,024 in Non-Equity Incentive Plan Compensation, and $27,930 in all other compensation.
54.

The 2022 Proxy Statement stated the following about Defendant LoCascio:

Mr. LoCascio has been CEO and Chairman since founding the Company in 1995
with the invention of Web Chat. As founder and CEO, Mr. LoCascio deeply
understands the technology and business of LivePerson and has been an integral
part of driving the Company’s market leadership in Conversational Artificial
Intelligence and building its best-in-class AI platform. In addition to his role at
LivePerson, Mr. LoCascio is a founding board member of EqualAI, an organization
which works with companies, policymakers, and experts to reduce bias in AI. Mr.
LoCascio has been widely recognized for his leadership in the technology space
and was the winner of the 2015 Smart CEO Circle of Evidence Award and was
named a New York City Ernst & Young Entrepreneur of the Year finalist in 2001
and 2008. Mr. LoCascio is also a founding member of the NYC Entrepreneurs
Council of the Partnership for New York City. In 2001, Mr. LoCascio started the
Dream Big Foundation with its first program, FeedingNYC, which gives families
in need a Thanksgiving dinner. To date, FeedingNYC has delivered meals to
approximately 90,000 families. Its second program, the Dream Big
Entrepreneurship Initiative, launched in 2014 to fund, mentor, coach and empower
local entrepreneurs in underserved communities. Mr. LoCascio received a B.B.A.
degree from Loyola College.
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Mr. LoCascio brings to the Board a unique perspective of LivePerson’s business
and his strategic vision and operational insights as the Company founder and CEO.
In addition, the Company values Mr. LoCascio’s extensive technology experience,
specifically in the cloud-based technologies space, as well as his strong
entrepreneurial background.
55.

Upon information and belief, Defendant LoCascio is a citizen of New York.

Defendant Mossler
56.

Defendant Mossler served as a Company director from 2017 until he retired from

the Board on October 5, 2023. He previously served as a member of the Compensation Committee
and the Nominating and Corporate Governance Committee and as Co-Chair of the Social Impact
and Culture Committee. According to the 2023 Proxy Statement, as of August 11, 2023, Defendant
Mossler beneficially owned 150,519 shares of the Company’s common stock. Given that the price
per share of the Company’s common stock at the close of trading on August 11, 2023 was $5.08,
Defendant Mossler owned approximately $764,637 worth of LivePerson stock as of that date.
57.

For the 2022 Fiscal Year, Defendant Mossler received $257,010 in total

compensation from the Company. This included $57,500 in fees earned or paid in cash and
$200,010 in stock awards.
58.

The 2022 Proxy Statement stated the following about Defendant Mossler:

Mr. Mossler brings experience as an executive, investor and entrepreneur. He has
been an independent consultant, entrepreneur and philanthropist since June 2016.
From August 1999 until June 2016, Mr. Mossler worked in various senior
leadership positions at Zappos, including Senior Vice President of Merchandising,
and helped Zappos grow into a company with more than $1 billion in gross
merchandise sales before it was bought by Amazon in 2009. From September 1991
to August 1999, Mr. Mossler worked in various positions at Nordstrom. In addition
to Mr. Mossler’s career in e-commerce and retail, he assisted with the launch and
building of, and previously served on the board of, Downtown Project, a company
dedicated to helping revitalize part of downtown Las Vegas through investment in
small businesses, tech startups, real estate, arts, culture and education. Mr. Mossler
founded Honus Capital LLC, a hands-on investment fund for Las Vegas-area
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entrepreneurs. He also co-founded the popular Mexican restaurant chain Nacho
Daddy. Mr. Mossler graduated from Southern Oregon University with a B.S. degree
in Business.
Mr. Mossler brings to the Board significant expertise in call center services, in
addition to extensive experience in consumer-facing industries and consumer
experience more broadly. Mr. Mossler also has extensive experience in assisting
with business growth and providing both knowledge of technology, e-commerce,
and product merchandising knowledge.
59.

Upon information and belief, Defendant Mossler is a citizen of Nevada.

Defendant Pegueros
60.

Defendant Pegueros has served as Company director since December 2022. She

also serves as a member of the Company’s Compensation Committee, Nominating and Corporate
Governance Committee, and Chair of the Operating Committee. According to the 2023 Proxy
Statement, as of August 11, 2023, Defendant Pegueros beneficially owned 49 shares of the
Company’s common stock. Given that the price per share of the Company’s common stock at the
close of trading on August 11, 2023 was $5.08, Defendant Pegueros owned approximately $248.92
worth of LivePerson stock as of that date.
61.

The 2023 Proxy Statement said the following about Defendant Pegueros:

Ms. Pegueros brings over three decades of experience and leadership in software,
technology and cybersecurity to LivePerson. Most recently, she served as the Chief
Trust & Security Officer of Onelogin, Inc., the identity platform for secure, scalable
and smart experiences that connect people to technology. Prior to that, Ms.
Pegueros served as Vice President and Chief Information Security Officer of
DocuSign, Inc., the world’s leading way to electronically sign and manage
contracts. Ms. Pegueros also previously served as Senior Vice President of
Information Security at U.S. Bancorp; Chief Information Security Officer at
Expedia Group, Inc.; and First Vice President, Security Assessment Services at
Washington Mutual, Inc. Currently, Ms. Pegueros serves on the board of Prisidio
Inc., a cloud-based secure digital vault, and as a member of the board and the Audit
Committee of Boeing Employee Credit Union. Previously, Ms. Pegueros served on
the board of Carbon Black, Inc., an endpoint security company, which was acquired
by VMware, Inc. in October 2019. Ms. Pegueros holds an M.B.A. and Public
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Management Certificate from Stanford Graduate School of Business, a M.S. in
Telecommunications from the University of Colorado at Boulder, and a B.S. in
Mechanical Engineering from the University of California at Berkeley. She is
Directorship Certified through the NACD as well as a certified Qualified
Technology Expert through the Digital Directors Network. She also holds GSEC,
CRISC, CISM, and CISSP security certifications as well as the Certified
Information Privacy Professional Europe (CIPP/E) privacy certification.
Ms. Pegueros brings to the Board extensive senior leadership experience,
technological expertise and innovation, and deep knowledge in the areas of
governance and organizational management.
62.

Upon information and belief, Defendant Pegueros is a citizen of

Washington.
Defendant Wesemann
63.

Defendant Wesemann has served as a Company director since November 2004. He

also serves as the Chair of the Nominating and Corporate Governance Committee and as a member
of the Audit Committee and the Compensation Committee. According to the 2023 Proxy
Statement, as of August 11, 2023, Defendant Wesemann beneficially owned 400,971 shares of the
Company’s common stock. Given that the price per share of the Company’s common stock at the
close of trading on August 11, 2023 was $5.08, Defendant Wesemann owned approximately $2
million worth of LivePerson stock as of that date.
64.

For the 2022 Fiscal Year, Defendant Wesemann received $262,510 in total

compensation from the Company. This included $62,500 in fees earned or paid in cash and
$200,010 in stock awards.
65.

The 2023 Proxy Statement stated the following about Defendant Wesemann:

Mr. Wesemann brings experience as an executive, board member and investor in
various technology companies. Mr. Wesemann has been an independent consultant
and an independent investor since 2002 in the software and consumer services
industries. In addition to his role as a member of the Board, Mr. Wesemann has served
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on the board of directors of Aclarion, Inc. (Nasdaq: ACON), a medical SAAS company
that listed on Nasdaq in 2022, since 2016 and has served as its Lead Independent
Director since 2022. He also serves on the boards of directors of several privately-held
companies, including STATIONHEAD, a social audio company, and Mylio, a photo
management company. From March 2016 until January 2019, Mr. Wesemann was
CEO of LARC Networks Inc., a communication, security and privacy technology
developer. Earlier in his career, Mr. Wesemann was CEO of NextPage, Inc., a provider
of document management systems, CEO of netLens Inc., a peer-to-peer platform for
creating distributed applications that was acquired by NextPage, and Vice President of
Sales of Genesys Telecommunications Laboratories, Inc., a leader in computertelephony integration. Mr. Wesemann received a B.A. degree from Glassboro State
College (now called Rowan University).
Mr. Wesemann brings to the Board notable technology, software and sales experience,
in addition to extensive CEO, management and board experience at public and private
software and technology companies.
66.

Upon information and belief, Defendant Wesemann is a citizen of California.

Defendant Zheng
67.

Defendant Zheng has served as a Company director since December 2022. She also

serves as a member of the Audit Committee and the Compensation Committee. According to the
2023 Proxy Statement, as of August 11, 2023, Defendant Zheng beneficially owned 3,000 shares
of the Company’s common stock. Given that the price per share of the Company’s common stock
at the close of trading on August 11, 2023 was $5.08, Defendant Zheng owned approximately
$15,240 worth of LivePerson stock as of that date.
68.

The 2023 Proxy Statement stated the following about Defendant Zheng:

Ms. Zheng brings over two decades of experience and leadership in B2B software,
marketing and customer engagement to LivePerson. Most recently, Ms. Zheng
served as Chief Marketing Officer of Bill Holdings, Inc., a provider of cloud-based
software that automates back-office financial operations for small and midsize
businesses. Before that, she served as Chief Marketing Officer at Tintri, Inc., a
virtualization focused storage company. Ms. Zheng also previously served, on a
consulting basis, as Head of Marketing of Medallia, Inc., a company offering SaaS
customer experience and enterprise feedback management software. Prior to that,
as part of the executive team at VMware, Inc, a software company providing cloud
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computing infrastructure and services, Ms. Zheng served as Vice President of
Corporate and Worldwide Marketing, and Vice President of Global Support
Services. Ms. Zheng currently serves on the boards of MeridianLink, Inc., a
provider of cloud-based products and services that enable financial institutions to
streamline digital lending for consumers and businesses; BillTrust, Inc., a provider
of cloud-based B2B accounts receivable automation products and services; and
Splashtop, Inc., a remote access and remote support software company. Previously,
Ms. Zheng served on the boards of Poly Inc., a global communications technology
company until its acquisition by HP, Inc in August, 2022; and Stella Connect Inc.,
a customer feedback software company, which was acquired by Medallia in
September 2020. She holds a NACD Directorship Certification from the National
Association of Corporate Directors. Ms. Zheng holds an M.B.A. from the Haas
School of Business at the University of California, Berkeley and a B.S. in Materials
Science and Engineering from the Massachusetts Institute of Technology.
Ms. Zheng brings to the Board notable insights in corporate strategy, go-to-market
operations, and executive leadership experience.
69.

Upon information and belief, Defendant Zheng is a citizen of California.
FIDUCIARY DUTIES OF THE INDIVIDUAL DEFENDANTS

70.

By reason of their positions as officers, directors, and/or fiduciaries of LivePerson

and because of their ability to control the business and corporate affairs of LivePerson, the
Individual Defendants owed LivePerson and its shareholders fiduciary obligations of trust, loyalty,
good faith, and due care, and were and are required to use their utmost ability to control and
manage LivePerson in a fair, just, honest, and equitable manner. The Individual Defendants were
and are required to act in furtherance of the best interests of LivePerson and its shareholders so as
to benefit all shareholders equally.
71.

Each director and officer of the Company owes to LivePerson and its shareholders

the fiduciary duty to exercise good faith and diligence in the administration of the Company and
in the use and preservation of its property and assets and the highest obligations of fair dealing.

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72.

The Individual Defendants, because of their positions of control and authority as

directors and/or officers of LivePerson, were able to and did, directly and/or indirectly, exercise
control over the wrongful acts complained of herein.
73.

To discharge their duties, the officers and directors of LivePerson were required to

exercise reasonable and prudent supervision over the management, policies, controls, and
operations of the Company.
74.

Each Individual Defendant, by virtue of their position as a director and/or officer,

owed to the Company and to its shareholders the highest fiduciary duties of loyalty, good faith,
and the exercise of due care and diligence in the management and administration of the affairs of
the Company, as well as in the use and preservation of its property and assets. The conduct of the
Individual Defendants complained of herein involves a knowing and culpable violation of their
obligations as directors and officers of LivePerson, the absence of good faith on their part, or a
reckless disregard for their duties to the Company and its shareholders that the Individual
Defendants were aware or should have been aware posed a risk of serious injury to the Company.
The conduct of the Individual Defendants who were also the officers and directors of the Company
has been ratified by the remaining Individual Defendants who collectively comprised a majority
of LivePerson’s Board at all relevant times.
75.

As the senior executive officers and/or directors of a publicly-traded company

whose common stock was registered with the SEC pursuant to the Exchange Act and traded on the
NASDAQ, the Individual Defendants had a duty to prevent and not to effect the dissemination of
inaccurate and untruthful information with respect to the Company’s financial condition,
performance, growth, operations, financial statements, business, products, management, earnings,
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internal controls, and present and future business prospects, including the dissemination of false
information regarding the Company’s business, prospects, and operations, and had a duty to cause
the Company to disclose in its regulatory filings with the SEC all those facts described in this
Complaint that it failed to disclose, so that the market price of the Company’s common stock
would be based upon truthful and accurate information. Further, they had a duty to ensure the
Company remained in compliance with all applicable laws.
76.

To discharge their duties, the officers and directors of LivePerson were required to

exercise reasonable and prudent supervision over the management, policies, practices, and internal
controls of the Company. By virtue of such duties, the officers and directors of LivePerson were
required to, among other things:
(a)

ensure that the Company was operated in a diligent, honest, and prudent manner in

accordance with the laws and regulations of Delaware, New York, and the United States, and
pursuant to LivePerson’s own Code of Conduct (the “Code of Conduct”);
(b)

conduct the affairs of the Company in an efficient, business-like manner so as to

make it possible to provide the highest quality performance of its business, to avoid wasting the
Company’s assets, and to maximize the value of the Company’s stock;
(c)

remain informed as to how LivePerson conducted its operations, and, upon receipt

of notice or information of imprudent or unsound conditions or practices, to make reasonable
inquiry in connection therewith, and to take steps to correct such conditions or practices;
(d)

establish and maintain systematic and accurate records and reports of the business

and internal affairs of LivePerson and procedures for the reporting of the business and internal

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affairs to the Board and to periodically investigate, or cause independent investigation to be made
of, said reports and records;
(e)

maintain and implement an adequate and functioning system of internal legal,

financial, and management controls, such that LivePerson’s operations would comply with all
applicable laws and LivePerson’s financial statements and regulatory filings filed with the SEC
and disseminated to the public and the Company’s shareholders would be accurate;
(f)

exercise reasonable control and supervision over the public statements made by the

Company’s officers and employees and any other reports or information that the Company was
required by law to disseminate;
(g)

refrain from unduly benefiting themselves and other Company insiders at the

expense of the Company; and
(h)

examine and evaluate any reports of examinations, audits, or other financial

information concerning the financial affairs of the Company and to make full and accurate
disclosure of all material facts concerning, inter alia, each of the subjects and duties set forth
above.
77.

Each of the Individual Defendants further owed to LivePerson and the shareholders

the duty of loyalty requiring that each favor LivePerson’s interest and that of its shareholders over
their own while conducting the affairs of the Company and refrain from using their position,
influence, or knowledge of the affairs of the Company to gain personal advantage.
78.

At all times relevant hereto, the Individual Defendants were the agents of each other

and of LivePerson and were at all times acting within the course and scope of such agency.

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79.

Because of their advisory, executive, managerial, directorial, and controlling

positions with LivePerson, each of the Individual Defendants had access to adverse, nonpublic
information about the Company.
80.

The Individual Defendants, because of their positions of control and authority, were

able to and did, directly or indirectly, exercise control over the wrongful acts complained of herein,
as well as the contents of the various public statements issued by LivePerson.
CONSPIRACY, AIDING AND ABETTING, AND CONCERTED ACTION
81.

In committing the wrongful acts alleged herein, the Individual Defendants have

pursued, or joined in the pursuit of, a common course of conduct, and have acted in concert with
and conspired with one another in furtherance of their wrongdoing. The Individual Defendants
caused the Company to conceal the true facts as alleged herein. The Individual Defendants further
aided and abetted and/or assisted each other in breaching their respective duties.
82.

The purpose and effect of the conspiracy, common enterprise, and/or common

course of conduct was, among other things, to: (i) facilitate and disguise the Individual Defendants’
violations of law, including breaches of fiduciary duty, unjust enrichment, waste of corporate
assets, gross mismanagement, abuse of control, and violations of the Exchange Act ; (ii) conceal
adverse information concerning the Company’s operations, financial condition, legal compliance,
future business prospects, and internal controls; and (iii) artificially inflate the Company’s stock
price.
83.

The Individual Defendants accomplished their conspiracy, common enterprise,

and/or common course of conduct by causing the Company purposefully or recklessly to conceal
material facts, fail to correct such misrepresentations, and violate applicable laws. In furtherance
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of this plan, conspiracy, and course of conduct, the Individual Defendants collectively and
individually took the actions set forth herein. Because the actions described herein occurred under
the authority of the Board, each of the Individual Defendants who is a director of LivePerson was
a direct, necessary, and substantial participant in the conspiracy, common enterprise, and/or
common course of conduct complained of herein.
84.

Each of the Individual Defendants aided and abetted and rendered substantial

assistance in the wrongs complained of herein. In taking such actions to substantially assist the
commission of the wrongdoing complained of herein, each of the Individual Defendants acted with
actual or constructive knowledge of the primary wrongdoing, either took direct part in, or
substantially assisted in the accomplishment of that wrongdoing, and was or should have been
aware of his overall contribution to and furtherance of the wrongdoing.
85.

At all times relevant hereto, each of the Individual Defendants was the agent of

each of the other Individual Defendants and of LivePerson and was at all times acting within the
course and scope of such agency.
LIVEPERSON’S CODE OF CONDUCT
86.

The Company’s Code of Conduct represents that the Board “adopted this Code of

Conduct as a set of guidelines for Company employees, officers, directors and consultants,
intended to focus the Board of Directors and the Company’s management on areas of ethical risk,
provide guidance to personnel to help them recognize and deal with ethical issues, provide
mechanisms to report unethical conduct, and help to foster a culture of honesty and
accountability.”

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87.

The Code of Conduct states that “We expect each of our employees, officers and

directors to read and understand this Code of Conduct and to abide by it. The Company expects
its consultants to generally abide by this Code of Conduct as well. Those who violate this Code of
Conduct will be subject to disciplinary action, up to and including termination.”
88.

The Code of Conduct provides, as to “Promotion of Ethical Behavior Through

Discussion, Compliance and Reporting -- Reporting Any Illegal or Unethical Behavior,” that:
Employees, officers and directors should strive to identify and raise potential issues
before they lead to problems, and should ask a supervisor, manager or other
appropriate personnel about the application of this Code of Conduct whenever in
doubt. An employee, officer or director who becomes aware of any existing or
potential violation of this Code of Conduct or any other illegal or unethical behavior
by any officer, director or employee or by anyone purporting to be acting on the
Company’s behalf should promptly notify the General Counsel, the Chief
Executive Officer, the Chief Financial Officer or the Chairperson of the Audit
Committee (the “Audit Committee”) of the Board of Directors (collectively, the
“Compliance Team”).
Any employee, officer or director can also anonymously report the existing or
potential violation by delivering the report via regular mail to c/o Audit Committee,
LivePerson, Inc., 475 Tenth Avenue, Fifth Floor, New York, New York 10018. See
the Company’s Whistleblower Policy for more information about making
anonymous reports about accounting and financial matters.
89.

The Code of Conduct provides, as to “Conflicts of Interest,” the following, in

relevant part:
A “conflict of interest” occurs when an individual’s private interest interferes in
any way – or even appears to interfere – with the interests of the Company as a
whole. While our employees, officers and directors are free to make personal
investments and enjoy social relations and normal business courtesies, they must
not have any personal interests that adversely influence the performance of their
job responsibilities. A conflict situation can arise when an employee, officer or
director takes actions or has interests that may make it difficult to perform his or
her Company work objectively and effectively. Conflicts of interest also arise when
an employee, officer or director, or a member of his or her family, receives
improper personal benefits as a result of his or her position in the Company,
whether received from the Company or a third party. Gifts to, loans to, or
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guarantees of obligations of, employees, officers and directors and their respective
family members may create conflicts of interest. Federal law prohibits personal
loans from the Company to directors and executive officers. In addition, in general,
it is a conflict of interest for a Company employee or officer to work simultaneously
for a competitor, customer or supplier absent an express written consent or waiver
from the Company. Conflicts of interest also arise when employees have a direct or
indirect ownership in a non-public company that is a competitor of the Company
or is doing business with the Company.
Conflicts of interest are prohibited as a matter of Company policy, unless they have
been approved by the Company. Service to the Company should never be
subordinated to personal gain and advantage. Conflicts of interest should, to the
extent possible, be avoided. Conflicts are not always clear-cut. Any employee,
officer or director who becomes aware of a material transaction or relationship that
could reasonably be expected to give rise to a conflict of interest, or has a question
as to a potential conflict, should discuss the matter promptly with a member of the
Compliance Team.
90.

The Code of Conduct provides, as to “Fair Dealing,” that:

The Company does not seek competitive advantages through illegal or unethical
business practices. Each employee, officer and director should endeavor to deal
fairly with the Company’s clients, service providers, suppliers, competitors and
employees. No employee, officer or director should take unfair advantage of
anyone through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts or any unfair-dealing practice. Stealing
proprietary information, misusing trade secret information that was obtained
without the owner’s consent, or inducing such disclosures by past or present
employees of other companies is prohibited.
91.

The Code of Conduct provides, as to “Protection and Proper Use of Corporate

Assets,” that:
In carrying out their duties and responsibilities, employees, officers and directors
should protect the Company’s assets and ensure their efficient use. Theft,
carelessness, and waste have a direct impact on the Company’s profitability.
Company assets, such as facilities, supplies, materials, intellectual property,
information and other assets owned or leased by the Company, or that are otherwise
in the Company’s possession, should be used only for legitimate business purposes
of the Company. Incidental personal use may be appropriate for certain Company
assets, but an employee should check with a supervisor to determine what may be
appropriate.
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92.

The Code of Conduct provides, as to “Full, Fair, Accurate, Timely and

Understandable Disclosure,” that:
It is the Company’s policy to make full, fair, accurate, timely and understandable
disclosure in the reports and documents that the Company files with, or submits to,
the Securities and Exchange Commission, any other applicable federal or state
agency, and in other public communications made by the Company. All employees,
officers and directors should promptly bring to the attention of the Audit Committee
any material information of which they may become aware that affects the
disclosures made by the Company in its public filings or otherwise.
Depending on their respective positions with the Company, employees, officers or
directors may be called upon to provide information necessary to assure that the
Company’s public reports meet these requirements. The Company expects
employees, officers and directors to take this responsibility very seriously and to
provide prompt and accurate answers to inquiries related to the Company’s public
disclosure requirements.
93.

The Code of Conduct provides, as to “Compliance with Laws, Rules and

Regulations,” that:
All employees, officers and directors of the Company must comply with all of the
laws, rules and regulations of the United States and other countries, as well as the
states, counties, cities and other jurisdictions, applicable to the Company or its
business and refrain from any form of illegal, dishonest or unethical conduct. As a
public reporting company with its stock trading on Nasdaq, the Company is also
subject to the applicable listing standards of the Nasdaq Global Select Market.
This Code of Conduct does not attempt to summarize all laws, rules and regulations
applicable to the Company or its business. You should consult the various
guidelines the Company has prepared on specific laws, rules and regulations, which
you can find summarized in the Employee Handbook, including employment laws
concerning equal employment and sexual and other types of harassment;
immigration laws concerning hiring of documented workers; antitrust laws;
environmental laws; occupational health and safety laws; food and drug laws;
securities laws concerning disclosure requirements and insider trading; and antibribery laws including foreign corrupt practices. Employees should consult with a
supervisor if they have questions about laws they think may be applicable to the
Company or its business.
Generally, it is both illegal and against Company policy for any employee, officer
or director who is aware of material nonpublic information relating to the Company
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to buy or sell any securities of the Company, or recommend that another person
buy, sell or hold the securities of the Company. More detailed rules governing the
trading of securities by the Company’s employees, officers and directors are set
forth in the Company’s Insider Trading Policy. Any employee, officer or director
who is uncertain about the legal rules involving his or her purchase or sale of any
Company securities should consult with the Company’s Insider Trading
Compliance Officer (currently the General Counsel) before making any such
purchase or sale.
94.

The Code of Conduct provides, as to “Accounting Complaints,” the following:

The Audit Committee is responsible for establishing procedures for the receipt,
retention and treatment of complaints regarding accounting, internal accounting
controls or auditing matters. Employees, officers or directors who have concerns or
complaints regarding such matters are encouraged to promptly submit those
concerns or complaints to the Audit Committee, which, subject to its duties arising
under applicable law, regulations and legal proceedings, will treat such submissions
confidentially. Such submission may be directed to c/o Audit Committee,
LivePerson, Inc., 475 Tenth Avenue, Fifth Floor, New York, New York 10018. See
the Company’s Whistleblower Policy for more information about making
anonymous reports about accounting and financial matters. No one will be subject
to retaliation because of a good faith report of a suspected violation.
95.

Regarding “Authority to Grant Waivers,” the Code of Conduct states the following:

From time to time, the Company may waive certain provisions of this Code of
Conduct. Any employee, officer or director who believes that a waiver may be
called for should discuss the matter with a member of the Compliance Team.
Waivers for executive officers (including senior financial officers) or directors of
the Company may be made only by the Board of Directors.
96.

In violation of the Code of Conduct, the Individual Defendants (as key officers and

as members of the Company’s Board) conducted little, if any, oversight of the Company’s
engagement in the Individual Defendants’ scheme to issue materially false and misleading
statements to the public and to facilitate and disguise the Individual Defendants’ violations of law,
including, but not limited to, violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act,
breaches of fiduciary duty, gross mismanagement, and unjust enrichment. Moreover, one of the
Individual Defendants violated the Code of Conduct by engaging in insider trading. In violation
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of the Code of Conduct, the Individual Defendants consciously disregarded their duties to comply
with the applicable laws and regulations, engage in fair dealing, avoid using corporate
opportunities for personal gain, avoid conflicts of interest, appropriately maintain the Company’s
books, records, accounts, and financial statements, and make accurate filings with the SEC.
LIVEPERSON’S CODE OF ETHICS
97.

The Company also maintains a Code of Ethics specifically targeted to LivePerson’s

“Chief Executive Officer and Senior Financial Officers.” The Code of Ethics provides that the
“Board of Directors is responsible for setting the standards of conduct contained in this Code of
Ethics and for updating these standards as appropriate to reflect legal and regulatory
developments.”
98.

The Board adopted the Code of Ethics to “promote honest and ethical conduct,

including the ethical handling of actual or apparent conflicts of interest between personal and
professional relationships; full, fair, accurate, timely and understandable disclosure in reports and
documents that the Company files with or submits to the Securities and Exchange Commission
and in other public communications made by the Company; compliance with applicable
governmental rules and regulations; the prompt internal reporting of violations of the Code of
Ethics to an appropriate person or persons identified herewith and accountability for adherence to
this Code of Ethics.”
99.

The Code of Ethics further maintains that the Individual Defendants are “bound by

the requirements and standards of both the Company’s Code of Conduct and this Code of Ethics,
as well as those set forth in all other applicable policies, procedures and guidelines provided by
the Company to employees.”
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100.

The Code of Ethics requires the Individual Defendants to do the following, in

relevant part:
•

Endeavor to act with honesty and integrity, including the ethical handling
of actual or apparent conflicts of interest between personal and professional
relationships, as further discussed in the Code of Conduct, and the
observance of both the form and the spirit of technical and ethical
compliance and accounting standards.

•

Act in good faith, responsibly, and with due care, competence and diligence,
without misrepresenting or omitting material facts or allowing one’s
independent judgment to be compromised.

•

Promote full, fair, accurate, timely and understandable disclosure in the
reports and documents that the Company files with, or submits to, the
Securities and Exchange Commission or other applicable federal, foreign or
state agency, and in other public communications made by the Company,
and to promptly bring to the attention of the Audit Committee of the Board
of Directors (the “Audit Committee”) any material information of which
they may become aware that affects the disclosures made by the Company
in its public filings or otherwise.

•

Promptly bring to the attention of the Audit Committee any information
they may have concerning: (a) significant deficiencies in the Company’s
disclosure controls and procedures that could adversely affect the
Company’s ability to record, process, summarize and report, within the time
periods specified in the Securities and Exchange Commission’s or other
applicable federal, foreign or state agency’s rules and forms, the
information required to be disclosed by the Company in the reports that the
Company files or submits under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and to ensure that such information is
accumulated and communicated to the Company’s management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure; or (b) any fraud,
whether or not material, that involves management or other employees who
have a significant role in the Company’s financial reporting, internal control
over financial reporting or disclosure controls and procedures.

•

Endeavor to comply, and to cause the Company to comply, with applicable
governmental laws, rules and regulations and promptly bring to the
attention of the Audit Committee any information they may have
concerning evidence of a material violation of the securities or other laws,
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rules or regulations applicable to the Company and the operation of its
business, by the Company or any agent thereof.
•

101.

Accept accountability for adherence to this Code of Ethics, including
promptly reporting to the Audit Committee any information they may have
concerning evidence of a material violation of this Code of Ethics.
The Code of Ethics also states the following regarding the Board following the

Code of Conduct, Code of Ethics, and any waivers to the Code of Ethics:
The Chief Executive Officer and Senior Financial Officers are expected to adhere
to this Code of Ethics. The Company shall determine appropriate actions to be taken
in the event of violations of this Code of Ethics by any of these employees and as
set forth in the Company’s Code of Conduct. Such actions shall be reasonably
designed to deter wrongdoing and to promote accountability for adherence to this
Code of Ethics. Waivers of this Code of Ethics may only be made by the Board of
Directors. The Company will also appropriately disclose any substantive
amendment to, and any material waiver of, any provision of this Code of Ethics that
applies to these employees pursuant to the Exchange Act and the applicable rules
of each stock exchange on which the Company’s shares are listed or quoted.
102.

In violation of the Code of Ethics, the Individual Defendants (as key officers and

as members of the Company’s Board) conducted little, if any, oversight of the Company’s
engagement in the Individual Defendants’ scheme to issue materially false and misleading
statements to the public and to facilitate and disguise the Individual Defendants’ violations of law,
including, but not limited to, violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act,
breaches of fiduciary duty, gross mismanagement, and unjust enrichment. In violation of the Code
of Ethics, the Individual Defendants consciously disregarded their duties to comply with the
applicable laws and regulations, engage in fair dealing, avoid using corporate opportunities for
personal gain, avoid conflicts of interest, appropriately maintain the Company’s books, records,
accounts, and financial statements, and make accurate filings with the SEC.
LIVEPERSON’S AUDIT COMMITTEE CHARTER
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103.

The Company also maintains an Audit Committee Charter. The purpose of the

Audit Committee is to oversee:
the accounting and financial reporting processes of the Company and audits of its
financial statements; the effectiveness of the Company’s internal control over
financial reporting, including the performance of the Company’s internal audit
function; the Company’s compliance with legal and regulatory, accounting and
financial reporting requirements, including internal controls and whistle-blower
procedures designed for that purpose and its Code of Conduct and its Code of Ethics
for the Chief Executive Officer and Senior Financial Officers, and programs
established in accordance therewith; the Company’s independent registered public
accounting firm’s qualifications, performance and independence; and the
Company’s enterprise risk management framework and its policies and procedures
for risk management.
104.

The primary role of the Audit Committee is to “oversee the financial reporting and

disclosure process.”
105.

Regarding “Authority and Responsibility,” the Audit Committee Charter states the

following:
9. Review with management any significant changes to GAAP, SEC and other
accounting policies or standards that will impact or could impact the financial
reports under review. 10. Review significant changes to the Company’s accounting
principles and practices proposed by the independent auditor, the internal auditor,
if any, or management.
11. Instruct the independent auditor and the internal auditor, if any, to advise the
Audit Committee if there are any subjects that require special attention.
12. Instruct the independent auditor to report to the Audit Committee on all critical
accounting policies of the Company, all alternative treatments of financial
information within GAAP that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments and the
treatment preferred by the independent auditor, and other material written
communication between the independent auditor and management, and discuss
these matters with the independent auditor and management.
13. Meet with management and the independent auditor to discuss the annual
financial statements, Management’s Discussion and Analysis of Financial
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Condition and Results of Operations, and the report of the independent auditor with
respect to such annual financial statements and to discuss significant issues
encountered in the course of the audit work, including: restrictions on the scope of
activities; access to required information; significant disagreements with
management; the adequacy of internal controls, including any special steps adopted
in light of any significant deficiencies or material weaknesses in the design or
operation of internal control over financial reporting identified during the course of
the annual audit, and the adequacy of disclosures about changes in internal control
over financial reporting; the adequacy of the disclosure of off-balance sheet
transactions, arrangements, obligations and relationships in reports filed with the
SEC; any items the Company’s independent auditor is required to communicate in
accordance with auditing procedures and standards; and the appropriateness of the
presentation of any non-GAAP financial measures (as defined in the Regulations)
included in any report filed with the SEC or in any public disclosure or release; as
well as management’s response to such matters.
18. Review disclosures made to the Audit Committee by the Company’s Chief
Executive Officer and Chief Financial Officer during their certification process for
the Company’s annual reports on Form 10-K and quarterly reports on Form 10-Q
about any significant deficiencies in the design or operation of internal controls or
material weaknesses therein and any fraud involving management or other
employees who have a significant role in the Company’s internal controls.
19. Discuss with management any evidence of a material violation of the
Company’s Code of Conduct, or the Company’s Code of Ethics for the Chief
Executive Officer and Senior Financial Officers, or programs established in
connection therewith, including evidence of a material violation of securities laws
or breaches of fiduciary duty by the Company.
21. Have such direct and independent interaction with members of management,
including the Company’s Chief Financial Officer and the senior internal audit
executive, if any, as the Audit Committee believes appropriate.
22. Review and discuss with management and the independent auditor
management’s report on internal control over financial reporting, and the
independent auditor’s audit of the effectiveness of the Company’s internal control
over financial reporting and its attestation report, prior to the filing of the Form 10K.
23. Following review and discussions, if so determined by the Audit Committee,
recommend to the Board that the annual financial statements be included in the
Company’s annual report on Form 10-K.
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24. Generally review and discuss the Company’s earnings press releases, as well as
any financial information and earnings guidance provided to analysts and rating
agencies.
25. Discuss with management and the independent auditor the quarterly financial
statements prior to the filing of the Form 10-Q, including Management’s
Discussion and Analysis of Financial Condition and Results of Operations
contained therein; provided that this responsibility may be delegated to the
chairman of the Audit Committee or a member of the Audit Committee who is a
financial expert.
31. Periodically review and discuss with the Company’s General Counsel any legal
matter, including legal cases against or regulatory investigations involving the
Company or material violations of the Company’s Code of Business Conduct and
Ethics or programs established in connection therewith, that could have a
significant impact on the Company’s financial statements.
32. Discuss with the Company’s lead inside or outside legal counsel any legal
matters that may have a material impact on the financial statements or the
Company’s compliance policies.
33. Discuss with the independent auditor and management the Company’s risk
assessment and risk management guidelines, policies and processes.
34. On behalf of the Board, oversee the principal risk exposures facing the
Company and the Company’s mitigation efforts in respect of such risks, including,
but not limited to financial reporting risks, and credit and liquidity risks.
106.

In violation of the Audit Committee Charter, the Individual Defendants sitting on

the Audit Committee during the Relevant Period failed to adequately review and discuss the
Company’s quarterly earnings press releases; failed to adequately exercise their risk management
and risk assessment functions; and failed to ensure adequate Board oversight of the Company’s
internal control over financial reporting, disclosure controls and procedures, and Code of Conduct.
THE INDIVIDUAL DEFENDANTS’ MISCONDUCT
Background

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107.

Incorporated in Delaware in 1995 and headquartered in New York City,

LivePerson, since November 1998, has offered online and mobile messaging solutions for
businesses, purportedly providing businesses with “conversational solutions to orchestrate humans
and AI, at scale, and create a convenient and personalized relationship with their customers.” The
Company went public via an IPO on the NASDAQ in April 2000.
108.

LivePerson claims that its “Conversational Cloud” enables customers to interact

with chat bots, or automated internet chat robots, across “each of a brand’s primary digital
channels, including mobile apps, mobile and desktop web browsers, SMS, social media, and thirdparty consumer messaging platforms.” This service purportedly allows human agents to manage
customer correspondence in a more streamlined and efficient manner by giving customers
solutions faster instead of having to wait on hold on a phone call. LivePerson’s Conversational
Cloud can also purportedly “ingest traditional emails and convert them into messaging
conversations, or embed messaging conversations directly into web advertisements, rather than
redirect consumers to static website landing pages.”
109.

In February 2022, LivePerson acquired Lexington, Kentucky-based WildHealth, a

precision medicine service that purports to “leverage[] advanced machine learning to combine
DNA analysis, biometrics, microbiome testing and phenotypic data to provide people with a
blueprint for truly optimized health and a maximized health span.” LivePerson acquired
WildHealth in an effort to bolster its offerings in the healthcare space, thereafter combining
LivePerson’s Conversational AI with WildHealth to purportedly allow business-to-business
healthcare companies to “scale and personalize patient engagement.” WildHealth’s business model
includes receiving reimbursements from Medicare for furnishing certain services.
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110.

Just months after LivePerson’s acquisition of WildHealth, WildHealth received

notice that certain reimbursements for the Medicare COVID-19 Testing Program were suspended
pending further review.
False and Misleading Statements
May 10, 2022 Form 10-Q
111.

On May 10, 2022, after the market closed, LivePerson filed its quarterly report on

Form 10-Q with the SEC for the quarter ended March 31, 2022 (the “1Q 2022 10-Q”). The 1Q
2022 10-Q was signed by Defendants LoCascio and Collins and contained certifications pursuant
to the Sarbanes-Oxley Act of 2002 (“SOX”) attesting to the 1Q 2022 10-Q’s accuracy and
disclosure of all weaknesses in internal controls, which were signed by Defendants LoCascio and
Collins.
112.

The 1Q 2022 10-Q stated the following about the sufficiency of the Company’s

internal controls:
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as
of March 31, 2022 to ensure that the information we are required to disclose in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and to ensure that such information is
accumulated and communicated to our management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the
three months ended March 31, 2022 identified in connection with the evaluation
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thereof by our management, including the Chief Executive Officer and Chief
Financial Officer, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
(Emphasis added.)
2022 Proxy Statement
113.

On July 21, 2022, LivePerson filed the 2022 Proxy Statement with the SEC.

Defendants Cu, Layfield, Wesemann, Block, Mossler, Lavan, and LoCascio solicited the 2022
Proxy Statement, filed pursuant to Section 14(a) of the Exchange Act, which contained material
misstatements and omissions.
114.

The 2022 Proxy Statement called for shareholder approval of, inter alia: (1) the

reelection of Defendants Cu, Layfield, and Wesemann to the Board; (2) the ratification of the
appointment of BDO USA, LLP, as the independent registered public accounting firm of the
Company for the 2022 Fiscal Year; and (3) the approval, by advisory vote, of the compensation of
the Company’s named executive officers.
115.

With respect to the Company’s Risk Oversight, the 2022 Proxy Statement stated

the following:
The Board provides oversight of the Company’s management of risk. Senior
management has responsibility for the management of risk and reports to the Board
as needed with respect to its ongoing enterprise risk management efforts. Given the
heightened importance and relevance of risks related to privacy, data use and
cybersecurity, the Board as a whole oversees management of these risks. In
exercising its oversight of risk management, the Board has delegated to the Audit
Committee primary responsibility for the oversight of risks related to the
Company’s financial statements, internal controls, disclosure controls, and related
processes. As discussed in more detail below, the Board has delegated to the
Compensation Committee primary responsibility for the oversight of risk related to
the Company’s compensation policies and practices. The Board has delegated to
the Nominating and Corporate Governance Committee primary responsibility for
the oversight of risk related to the Company’s corporate governance practices. Each
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committee reports as needed to the full Board with respect to such committee’s
particular risk oversight responsibilities.
116.

Regarding the Code of Conduct and the Code of Ethics, the 2022 Proxy Statement

stated the following:
The Board has adopted Corporate Governance Guidelines that address items such
as the qualifications and responsibilities of our directors and director candidates,
corporate governance policies, and standards applicable to us in general. In
addition, the Board has adopted a Code of Conduct applicable to all of our
employees, including our executive officers, and our non-employee directors, as
well as a Code of Ethics for the Chief Executive Officer and Senior Financial
Officers. The Code of Conduct and Code of Ethics can be found
at https://ir.liveperson.com/corporate-governance/governance-overview.
117.

The 2022 Proxy Statement was materially false and misleading because it failed to

disclose that, contrary to the 2022 Proxy Statement’s descriptions of the Board’s risk oversight
function and the Audit Committee’s responsibilities, the Board and its committees were not
adequately exercising these functions, were causing and/or permitting the Company to issue false
and misleading statements, and were not complying with the Code of Conduct or the Code of
Ethics.
118.

The 2022 Proxy Statement also failed to disclose, inter alia, that: (1) the Company’s

internal controls pertaining to disclosure controls and procedures were materially ineffective; (2)
the Company failed to maintain internal controls over financial reporting, as they contained
material weaknesses; (3) as a result, the Company failed to disclose the suspension of WildHealth’s
Medicare reimbursements under the Testing Program and the resulting impact on LivePerson’s
future revenues; and (4) as a further result, the Company exaggerated and overstated its business
prospects and overall financial position. As a result of the foregoing, Defendants’ statements about
LivePerson’s business, operations, and prospects were materially false and misleading and/or
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lacked a reasonable basis at all relevant times.
119.

As a result of Defendants Cu, Layfield, Wesemann, Block, Mossler, Lavan, and

LoCascio causing the 2022 Proxy Statement to be false and misleading, Company shareholders
voted, inter alia, to re-elect Defendants Cu, Layfield, and Wesemann to the Board, thus allowing
them to continue breaching their fiduciary duties to the Company.
August 9, 2022 Form 10-Q
120.

On August 9, 2022, the Company filed its quarterly report on Form 10-Q with the

SEC for the quarter ended June 30, 2022 (the “2Q 2022 10-Q”). The 2Q 2022 10-Q was signed by
Defendants LoCascio and Collins and contained SOX certifications signed by Defendants
LoCascio and Collins attesting to the 2Q 2022 10-Q’s accuracy.
121.

The 2Q 2022 10-Q stated the following about the sufficiency of the Company’s

internal controls:
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as
of June 30, 2022 to ensure that the information we are required to disclose in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and to ensure that such information is
accumulated and communicated to our management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the
three months ended June 30, 2022 identified in connection with the evaluation
thereof by our management, including the Chief Executive Officer and Chief
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Financial Officer, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
(Emphasis added.)
November 7, 2022 Press Release
122.

On November 7, 2022, after the market closed, LivePerson issued a press release

on Form 8-K with the SEC wherein it announced its third quarter of 2022 financial results. The
press release declared that the Company expected strong, positive performance from WildHealth,
stating the following, in relevant part:
As for guidance, we expect continued strong performance by WildHealth and
elevated professional services in the fourth quarter. Considering those
expectations, coupled with more upsells and early renewals in the third quarter
than previously expected, we are raising revenue guidance for the full year. We
now expect revenue in a range of $517 million to $521 million, or 10% to 11% year
over year growth, an improvement to the midpoint of approximately $6 million.
For full year adjusted EBITDA, due to our current expectation for potential revenue
upside and additional P&L optimizations, we are reaffirming our previous guidance
range of $1 million to $10 million.
(Emphasis added.)
November 8, 2022 Form 10-Q
123.

On November 8, 2022, after market hours, the Company filed its quarterly report

on Form 10-Q with the SEC for the quarter ended September 30, 2022 (the “3Q 2022 10-Q”). The
3Q 2022 10-Q was signed by Defendants LoCascio and Collins and contained SOX certifications
signed by Defendants LoCascio and Collins attesting to the 3Q 2022 10-Q’s accuracy.
124.

The 3Q 2022 10-Q stated the following about the sufficiency of the Company’s

internal controls, in relevant part:
Item 4. Controls and Procedures
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Evaluation of Disclosure Controls and Procedures
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective as
of September 30, 2022 to ensure that the information we are required to disclose
in the reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and to ensure that such information is
accumulated and communicated to our management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the
three months ended September 30, 2022 identified in connection with the
evaluation thereof by our management, including the Chief Executive Officer and
Chief Financial Officer, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
(Emphasis added.)
125.

The statements identified in ¶¶ 111-112 and 120-124 above were materially false

and/or misleading and failed to disclose material adverse facts about the Company’s business,
operations, and prospects. Specifically, the identified statements failed to disclose that: (1) the
Company’s internal controls pertaining to disclosure controls and procedures were materially
ineffective; (2) the Company failed to maintain internal controls over financial reporting, as they
contained material weaknesses; (3) as a result, the Company failed to disclose the suspension of
WildHealth’s Medicare reimbursements under the Testing Program and the resulting impact on
LivePerson’s future revenues; and (4) as a further result, the Company exaggerated and overstated
its business prospects and overall financial position. As a result of the foregoing, Defendants’
statements about LivePerson’s business, operations, and prospects were materially false and
misleading and/or lacked a reasonable basis at all relevant times.
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The Truth Emerges
126.

On February 28, 2023, before the market opened, LivePerson issued a Notification

of Late Filing on Form 12b-25, announcing that the Company would be unable to timely file its
Annual Report on Form 10-K with the SEC:
The Company has determined that it is unable to file its Form 10-K within the
prescribed time period provided by the applicable rules of the Securities and
Exchange Commission without unreasonable effort and expense.
In view of the in-process integration of the Company's 2022 acquisition of
WildHealth, the Company requires more time to perform additional review and
testing of revenue recognition with respect to a recently discontinued WildHealth
program, for which Medicare reimbursement is suspended pending further
governmental review, and to complete its in-process review of internal controls
and procedures.
The Company currently anticipates filing its Form 10-K for the year ended
December 31, 2022 within the fifteen calendar day grace period provided by Rule
12b-25.
(Emphasis added.)
127.

On this news, LivePerson’s stock price fell $1.69 per share, or 14.31%, from a

closing price of $11.81 per share on February 27, 2023 to close at $10.12 per share on February
28, 2023.
128.

A week later, on March 6, 2023, before the market opened, LivePerson filed a

current report on Form 8-K with the SEC that revealed to investors that the Company’s acquisition
of WildHealth would deal a blow to the Company’s fourth quarter of 2022 revenue because of the
suspension of Medicare reimbursements in November 2022. In relevant part, the Form 8-K stated
the following:
On February 28, 202[3], LivePerson, Inc. (the “Company”) filed a Notification of
Late Filing on Form 12b-25 stating it was unable to file its Form 10-K for the year
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ended December 31, 2022 within the prescribed time period without unreasonable
effort or expense because it required additional time to complete a review of
revenue associated with a recently discontinued program of its subsidiary Wild
Health, and to complete its in-process review of internal controls and procedures.
To provide additional clarity to investors, the Company notes that the referenced
review of WildHealth revenue is anticipated to affect fourth quarter 2022 revenue
attributable to WildHealth’s participation in a Medicare demonstration program,
due to suspension in November 2022 of Medicare reimbursements under the
program and pending further governmental review.
The Company currently anticipates filing its Form 10-K for the year ended
December 31, 2022 within the fifteen calendar day grace period provided by Rule
12b-25.
(Emphasis added.)
129.

On this news, LivePerson’s stock price fell $0.78 per share, or 6.8%, from a closing

price of $11.47 per share on February 27, 2023 to close at $10.69 per share on March 7, 2023.
130.

Approximately one week later, on March 15, 2023, after the market closed,

LivePerson issued a press release that disclosed the Company’s fourth quarter of 2022 financial
results. The press release revealed a drop in revenue, stating the following, in relevant part:
Fourth Quarter Highlights
Total revenue was $122.5 million for the fourth quarter of 2022, a decrease of
1% as compared to the same period last year as the company continues to execute
on its plan to exit non-core lines of business. Within total revenue, business
operations revenue for the fourth quarter of 2022 decreased 1% from the
comparable prior-year period to $113.0 million, and revenue from consumer
operations decreased 3% from the comparable prior-year period to $9.4 million.
(Emphasis added.)
131.

The truth fully emerged on March 16, 2023 when, before the market opened,

LivePerson belatedly filed its 2022 10-K with the SEC. The 2022 10-K stated the following, in
relevant part:
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Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, including the Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as
that term is defined in Rule 13a-15(e) promulgated under the Exchange Act, as of
December 31, 2022.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that, due to certain control deficiencies which aggregated to a material
weakness in the Company’s internal control over financial reporting as further
described below, our disclosure controls and procedures were not effective as of
December 31, 2022.
Management’s Annual Report on Internal Control over Financial Reporting
Our management evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2022 based on the framework established in “Internal
Control — Integrated Framework (2013),” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). As a result of its review,
management identified deficiencies in the Company’s internal control over
financial reporting as of December 31, 2022 that in the aggregate constitute a
material weakness as further discussed below. As a result, our management
concluded that as of December 31, 2022, our internal control over financial
reporting was not effective.
The control deficiencies, which in aggregate constitute a material weakness, were
identified in connection with the Company’s previously disclosed review of
certain transactions related to its subsidiary WildHealth, which was acquired in
February 2022, and primarily include a combination of ineffective operation of
controls and inadequate controls related to: formal review, approval, and
evaluation of non-core, complex transactions as well as engagement with
government agencies; segregation of duties between accounting and contracting
approval functions for non-core, complex transactions; and formal review,
approval and evaluation of manual journal entries.
(Emphasis added.)
132.

On this news, LivePerson’s stock price fell $5.64 per share, or 57.73%, from a

closing price of $9.77 per share on March 15, 2023 to close at $4.13 per share on March 16, 2023.
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Repurchases During the Relevant Period
133.

During the Relevant Period, the Individual Defendants caused the Company to

initiate repurchases of its common stock that substantially damaged the Company. In total, the
Company spent an aggregate amount of over $221,301 to repurchase approximately 19,830 shares
of its own common stock at artificially inflated prices between November 1, 2022 and November
30, 2022.
134.

According to the 2022 10-K, between November 1, 2022 and November 30, 2022,

the Company purchased 19,830 shares of its common stock from Defendant Collins for
approximately $221,301 at an average price of $11.17 per share.
135.

As the Company’s stock was actually worth only $4.13 per share, the price at

closing on March 16, 2023, the Company overpaid by approximately $139,403 for repurchases of
its own stock from Defendant Collins between November 1, 2022 and November 30, 2022.
136.

Thus, in total, during the Relevant Period, the Company overpaid for repurchases

of its own stock by over $139,403.
DAMAGES TO LIVEPERSON
137.

As a direct and proximate result of the Individual Defendants’ conduct,

LivePerson has lost and expended, and will continue to lose and expend, many millions of dollars.
138.

Such expenditures include, but are not limited to, legal fees, costs, and any

payments for resolution of or to satisfy a judgment associated with the Securities Class Action,
and amounts paid to outside lawyers, accountants, and investigators in connection thereto.

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139.

Such expenditures and losses include the $139,403 the Company overpaid when it

repurchased its own common stock at artificially inflated prices during the Relevant Period before
the fraud was exposed.
140.

Such expenditures also include, but are not limited to, fees, costs, and any payments

for resolution of or to satisfy judgments associated with any other lawsuits filed against the
Company or the Individual Defendants based on the misconduct alleged herein, and amounts paid
to outside lawyers, accountants, and investigators in connection thereto.
141.

Such expenditures will also include costs incurred in any internal investigations

pertaining to violations of law, costs incurred in defending any investigations or legal actions taken
against the Company due to its violations of law, and payments of any fines or settlement amounts
associated with the Company’s violations.
142.

Additionally, these expenditures include, but are not limited to, unjust

compensation, benefits, and other payments provided to the Individual Defendants who breached
their fiduciary duties to the Company.
143.

As a direct and proximate result of the Individual Defendants’ conduct, LivePerson

has also suffered and will continue to suffer a loss of reputation and goodwill, and a “liar’s
discount” that will plague the Company’s stock in the future due to the Company’s and their
misrepresentations.
DERIVATIVE ALLEGATIONS
144.

Plaintiffs bring this action derivatively and for the benefit of LivePerson to redress

injuries suffered, and to be suffered, as a result of the Individual Defendants’ breaches of their
fiduciary duties as directors and/or officers of LivePerson, unjust enrichment, abuse of control,
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gross mismanagement, waste of corporate assets, violations of the Exchange Act, the aiding and
abetting thereof, as well as for contribution under Sections 10(b) and 21D of the Exchange Act.
145.

LivePerson is named solely as a nominal party in this action. This is not a collusive

action to confer jurisdiction on this Court that it would not otherwise have.
146.

Plaintiffs are, and have been at all relevant times, shareholders of LivePerson.

Plaintiffs will adequately and fairly represent the interests of LivePerson in enforcing and
prosecuting its rights, and, to that end, have retained competent counsel, experienced in derivative
litigation, to enforce and prosecute this action.
DEMAND FUTILITY ALLEGATIONS
147.

Plaintiffs incorporate by reference and reallege each and every allegation stated

above as if fully set forth herein.
148.

A pre-suit demand on the Board of LivePerson is futile and, therefore, excused. At

the time of filing of this action, the Board consists of the following eight individuals: Defendants
Layfield, Hansen, Lavan, Pegueros, Wesemann, and Zheng (the “Director Defendants”), along
with non-parties Jim Miller and Anthony John Sabino (together with the Director Defendants, the
“Directors”). Plaintiffs need only to allege demand futility as to four of the eight Directors who
are on the Board at the time this action is commenced.
149.

Demand is excused as to all of the Director Defendants because each one of them

faces, individually and collectively, a substantial likelihood of liability as a result of the scheme
they engaged in knowingly or recklessly to make and/or cause the Company to make false and
misleading statements and omissions of material fact, and, at the same time, to cause the Company
to overpay by nearly $139,403 for repurchases of its own stock from Defendant Collins, all of
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which renders the Director Defendants unable to impartially investigate the charges and decide
whether to pursue action against themselves and the other perpetrators of the scheme.
150.

Demand is excused as to nonparty Anthony John Sabino as he is an interested

director from his role as the CEO of the Company. Due to his role as CEO, he cannot
disinterestedly and impartially investigate the charges and decide whether to pursue action against
the Director Defendants and the other perpetrators of the scheme, as he depends upon the Director
Defendants for his livelihood. As a result, non-party Anthony John Sabino is not independent or
disinterested. Thus, demand upon non-party Anthony John Sabino is futile and excused.
151.

Moreover, three of the Director Defendants solicited the 2022 Proxy Statement to

call for a shareholder vote to, inter alia, re-elect themselves to the Board, thus allowing them to
continue breaching their fiduciary duties to the Company.
152.

In complete abdication of their fiduciary duties, the Director Defendants either

knowingly or recklessly caused or permitted LivePerson to issue materially false and misleading
statements. Specifically, the Director Defendants caused the Company to issue false and
misleading statements which were intended to make the Company appear more profitable and
attractive to investors. Moreover, the Director Defendants caused the Company to fail to maintain
internal controls. As a result of the foregoing, the Director Defendants breached their fiduciary
duties, face a substantial likelihood of liability, are not disinterested, and demand upon them is
futile, and thus excused.
153.

Additional reasons that demand as to Defendant Layfield is futile follow. Defendant

Layfield has served as the Chair of the Board since July 2023 and as a Company director since
November 2016. She previously served as the Lead Independent Director. Defendant Layfield also
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serves as a member of the Company’s Audit Committee, Nominating and Corporate Governance
Committee, and as Chair of the Compensation Committee. For her services, Defendant Layfield
is paid handsomely by the Company, receiving $265,010 in total compensation from the Company
for the 2022 Fiscal Year alone. As the Company’s trusted Chair of the Board, she conducted little,
if any, oversight of the scheme to cause the Company to make false and misleading statements,
consciously disregarded her duties to monitor internal controls over reporting and engagement in
the scheme, and consciously disregarded her duties to protect corporate assets. Defendant Layfield
also solicited the false and misleading 2022 Proxy Statement, which led to, inter alia, her reelection to the Board, thereby allowing her to continue to breach her fiduciary duties to the
Company. As a result, Defendant Layfield breached her fiduciary duties, faces a substantial
likelihood of liability, and is not independent or disinterested. Thus, demand upon Defendant
Layfield is futile and excused.
154.

Additional reasons that demand as to Defendant Hansen is futile follow. Defendant

Hansen has served as a Company director since December 2022. He also serves as a member of
the Company’s Audit Committee and Operating Committee. As a trusted Company director,
Defendant Hansen conducted little, if any, oversight of the scheme to cause LivePerson to make
false and misleading statements, consciously disregarded his duties to monitor such controls over
reporting and engagement in the scheme, and consciously disregarded his duties to protect
corporate assets. As a result, Defendant Hansen breached his fiduciary duties, faces a substantial
likelihood of liability, and is not independent or disinterested. Thus, demand upon Defendant
Hansen is futile and excused.

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155.

Additional reasons that demand as to Defendant Lavan is futile follow. Defendant

Lavan has served as Company director since January 2000. He also serves as a member of the
Company’s Compensation Committee, Operating Committee, and as Chair of the Company’s
Audit Committee. He has received and continues to receive handsome compensation for his role
as a director, including $267,510 in total compensation from the Company for the 2022 Fiscal
Year alone. In addition, he solicited the false and misleading 2022 Proxy Statement. As a trusted
Company director, Defendant Lavan conducted little, if any, oversight of the scheme to cause
LivePerson to make false and misleading statements, consciously disregarded his duties to
monitor such controls over reporting and engagement in the scheme, and consciously disregarded
his duties to protect corporate assets. As a result, Defendant Lavan breached his fiduciary duties,
faces a substantial likelihood of liability, and is not independent or disinterested. Thus, demand
upon Defendant Lavan is futile and excused.
156.

Additional reasons that demand as to Defendant Pegueros is futile follow.

Defendant Pegueros has served as a Company director since December 2022. She also serves as a
member of the Company’s Compensation Committee, Nominating and Corporate Governance
Committee, and as Chair of the Operating Committee. As a trusted Company director, Defendant
Pegueros conducted little, if any, oversight of the scheme to cause LivePerson to make false and
misleading statements, consciously disregarded her duties to monitor such controls over reporting
and engagement in the scheme, and consciously disregarded her duties to protect corporate assets.
As a result, Defendant Pegueros breached her fiduciary duties, faces a substantial likelihood of
liability, and is not independent or disinterested. Thus, demand upon Defendant Pegueros is futile
and excused.
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157.

Additional reasons that demand as to Defendant Wesemann is futile follow.

Defendant Wesemann has served as Company director since November 2004. He also serves as
the Chair of the Nominating and Corporate Governance Committee and as a member of the Audit
Committee and the Compensation Committee. He has received and continues to receive
handsome compensation for his role as a director, including $262,510 in total compensation from
the Company for the 2022 Fiscal Year alone. He also solicited the false and misleading 2022
Proxy Statement which led to, inter alia, his re-election to the Board, thereby allowing him to
continue to breach his fiduciary duties to the Company. As a trusted Company director, Defendant
Wesemann conducted little, if any, oversight of the scheme to cause LivePerson to make false
and misleading statements, consciously disregarded his duties to monitor such controls over
reporting and engagement in the scheme, and consciously disregarded his duties to protect
corporate assets. As a result, Defendant Wesemann breached his fiduciary duties, faces a
substantial likelihood of liability, and is not independent or disinterested. Thus, demand upon
Defendant Wesemann is futile and excused.
158.

Additional reasons that demand as to Defendant Zheng is futile follow. Defendant

Zheng has served as a Company director since December 2022. She also serves as a member of
the Audit Committee and Compensation Committee. As a trusted Company director, Defendant
Zheng conducted little, if any, oversight of the scheme to cause LivePerson to make false and
misleading statements, consciously disregarded her duties to monitor such controls over reporting
and engagement in the scheme, and consciously disregarded her duties to protect corporate assets.
As a result, Defendant Zheng breached her fiduciary duties, faces a substantial likelihood of

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liability, and is not independent or disinterested. Thus, demand upon Defendant Zheng is futile
and excused.
159.

Additional reasons that demand on the Board is futile follow.

160.

Each of the Director Defendants, individually and collectively, faces a substantial

likelihood of liability as a result of their intentional or reckless approval of the unnecessary and
harmful repurchases that caused the Company to overpay by thousands of dollars for its own
common stock during the Relevant Period from one of the primary wrongdoers, Defendant Collins.
The Director Defendants, as alleged herein, were aware or should have been aware of the
misinformation being spread by the Company and yet approved the repurchases. Thus, the Director
Defendants breached their fiduciary duties, face a substantial likelihood of liability, are not
independent or disinterested, and demand upon them is futile, and thus excused.
161.

Defendants Lavan, Layfield, and Wesemann (the “Audit Committee Defendants”)

served as members of the Company’s Audit Committee during the Relevant Period. The Audit
Committee Defendants violated the Audit Committee Charter by failing to adequately exercise
their risk management and risk assessment functions and failing to ensure adequate Board
oversight of the Company’s internal control over financial reporting, disclosure controls and
procedures, and Code of Conduct and Code of Ethics. Thus, the Audit Committee Defendants
breached their fiduciary duties and are not disinterested or independent. Therefore, demand is
further excused and futile as to the Audit Committee Defendants.
162.

In violation of the Code of Conduct and Code of Ethics, the Director Defendants

engaged in or permitted the scheme to cause the Company to issue materially false and misleading
statements to the investing public, and to facilitate and disguise the Individual Defendants’
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violations of law, including breaches of fiduciary duty, unjust enrichment, abuse of control, gross
mismanagement, waste of corporate assets, and violations of the Exchange Act. In addition, the
Individual Defendants violated the Code of Conduct and Code of Ethics by failing to act with
integrity, failing to avoid conflicts of interest, failing to ensure the Company’s disclosures were
accurate, failing to ensure the Company complied with applicable laws, rules, and regulations, and
failing to promptly report known violations of the Code of Conduct and Code of Ethics and the
law. Thus, the Director Defendants breached the Company’s own Code of Conduct and Code of
Ethics, are not disinterested, and demand is excused as to them.
163.

LivePerson has been and will continue to be exposed to significant losses due to

the wrongdoing complained of herein, yet the Directors have not filed any lawsuits against
themselves or any others who were responsible for the wrongful conduct to attempt to recover for
LivePerson any part of the damages LivePerson suffered and will continue to suffer thereby. Thus,
any demand upon the Director Defendants would be futile.
164.

The Individual Defendants’ conduct described herein and summarized above could

not have been the product of legitimate business judgment as it was based on bad faith and
intentional, reckless, or disloyal misconduct. Thus, none of the Director Defendants can claim
exculpation from their violations of duty pursuant to the Company’s charter (to the extent such a
provision exists). As a majority of the Director Defendants face a substantial likelihood of liability,
they are self-interested in the transactions challenged herein and cannot be presumed to be capable
of exercising independent and disinterested judgment about whether to pursue this action on behalf
of the shareholders of the Company. Accordingly, demand is excused as being futile.

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165.

The acts complained of herein constitute violations of fiduciary duties owed by

LivePerson’s officers and directors, and these acts are incapable of ratification.
166.

The Director Defendants may also be protected against personal liability for their

acts of mismanagement and breaches of fiduciary duty alleged herein by directors’ and officers’
liability insurance if they caused the Company to purchase it for their protection with corporate
funds, i.e., monies belonging to the stockholders of LivePerson. If there is a directors’ and officers’
liability insurance policy covering the Director Defendants, it may contain provisions that
eliminate coverage for any action brought directly by the Company against the Director
Defendants, known as, inter alia, the “insured-versus-insured exclusion.” As a result, if the
Director Defendants were to sue themselves or certain of the officers of LivePerson, there would
be no directors’ and officers’ insurance protection. Accordingly, the Director Defendants cannot
be expected to bring such a suit. On the other hand, if the suit is brought derivatively, as this action
is brought, such insurance coverage, if such an insurance policy exists, will provide a basis for the
Company to effectuate a recovery. Thus, demand on the Director Defendants is futile and,
therefore, excused.
167.

If there is no directors’ and officers’ liability insurance, then the Director

Defendants will not cause LivePerson to sue the Individual Defendants named herein, since, if
they did, they would face a large uninsured individual liability. Accordingly, demand is futile in
that event, as well.
168.

Thus, for all of the reasons set forth above, all of the Director Defendants, and, if

not all of them, at least four of the Directors, cannot consider a demand with disinterestedness and
independence. Consequently, a demand upon the Board is excused as futile.
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FIRST CLAIM
Against the Individual Defendants for Violations of Section 14(a) of the Exchange Act
146.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
147.

Section 14(a) of the Exchange Act, 15 U.S.C. § 78n(a)(1), provides that “[i]t shall

be unlawful for any person, by use of the mails or by any means or instrumentality of interstate
commerce or of any facility of a national securities exchange or otherwise, in contravention of
such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public
interest or for the protection of investors, to solicit or to permit the use of his name to solicit any
proxy or consent or authorization in respect of any security (other than an exempted security)
registered pursuant to section 12 of this title [15 U.S.C. § 78l].”
148.

Rule 14a-9, promulgated pursuant to § 14(a) of the Exchange Act, provides that no

proxy statement shall contain “any statement which, at the time and in the light of the
circumstances under which it is made, is false or misleading with respect to any material fact, or
which omits to state any material fact necessary in order to make the statements therein not false
or misleading.” 17 C.F.R. § 240.14a-9.
149.

Under the direction and watch of Defendants Cu, Layfield, Wesemann, Block,

Mossler, Lavan, and LoCascio, the 2022 Proxy Statement failed to disclose that, contrary to the
2022 Proxy Statement’s descriptions of the Board’s risk oversight function and the Audit
Committee’s responsibilities, the Board and its committees were not adequately exercising these
functions, were causing and/or permitting the Company to issue false and misleading statements,
and were not complying with the Code of Conduct and the Code of Ethics.
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150.

The 2022 Proxy Statement also failed to disclose that: (1) the Company’s internal

controls pertaining to disclosure controls and procedures were materially ineffective; (2) the
Company failed to maintain internal controls over financial reporting, as they contained material
weaknesses; (3) as a result, the Company failed to disclose the suspension of WildHealth’s
Medicare reimbursements under the Testing Program and the resulting impact on LivePerson’s
future revenues; and (4) as a further result, the Company exaggerated and overstated its business
prospects and overall financial position. As a result of the foregoing, Defendants’ statements about
LivePerson’s business, operations, and prospects were materially false and misleading and/or
lacked a reasonable basis at all relevant times.
151.

In the exercise of reasonable care, the Individual Defendants should have known

that by misrepresenting or failing to disclose the foregoing material facts, the statements contained
in the 2022 Proxy Statement were materially false and misleading. The misrepresentations and
omissions were material to Plaintiffs in voting on the matters set forth for shareholder
determination in the 2022 Proxy Statement, including, but not limited to, the re-election of
Defendants Cu, Layfield, and Wesemann to the Board.
152.

The false and misleading elements of the 2022 Proxy Statement led to, among other

things, the re-election of Defendants Cu, Layfield, and Wesemann, which allowed them to
continue to breach their fiduciary duties to LivePerson.
153.

The Company was damaged as a result of the Individual Defendants’ material

misrepresentations and omissions in the 2022 Proxy Statement.
154.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
SECOND CLAIM
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Against Individual Defendants for Violations of Section 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934
155.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
156.

The Individual Defendants participated in the scheme to defraud with the purpose

and effect of defrauding LivePerson. Not only is LivePerson now defending claims that it violated
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, but the Company itself
is also one of the largest victims of the unlawful scheme perpetrated upon LivePerson by the
Individual Defendants. With the price of its common stock trading at artificially-inflated prices
due to the Individual Defendants’ misconduct, the Individual Defendants caused the Company to
repurchase thousands of its own shares at artificially-inflated prices from Defendant Collins,
damaging LivePerson.
157.

During the Relevant Period, the Individual Defendants also individually and in

concert, directly and indirectly, by the use and means of instrumentalities of interstate commerce
and/or of the mails, engaged and participated in a continuous course of conduct designed to falsify
the Company’s press releases, public statements made in conference calls, and periodic and current
reports filed with the SEC.
158.

The Individual Defendants employed devices, schemes, and artifices to defraud

while in possession of adverse, material, non-public information and engaged in acts, practices
and a course of conduct that included the making of, or participation in the making of, untrue
and/or misleading statements of material facts and/or omitting to state material facts necessary in
order to make the statements made about LivePerson not misleading.

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159.

The Individual Defendants, as top executives and directors at the Company, are

liable as direct participants in the wrongs complained of herein. Through their positions of control
and authority as directors and officers of the Company, the Individual Defendants were able to and
did control the conduct complained of herein and the content of the public statements disseminated
by LivePerson.
160.

The Individual Defendants acted with scienter during the Relevant Period, in that

they either had actual knowledge of the scheme and the misrepresentations and/or omissions of
material facts set forth herein or acted with reckless disregard for the truth in that they failed to
ascertain and to disclose the true facts, even though such facts were available to them. The
Individual Defendants were the top executives of the Company, or received direct briefings from
them, and were therefore directly responsible for the scheme set forth herein and for the false and
misleading statements and/or omissions disseminated to the public through filings with the SEC.
161.

By virtue of the foregoing, the Individual Defendants have violated § 10(b) of the

Exchange Act, and Rule 10b-5 promulgated thereunder.
162.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
THIRD CLAIM

Against Individual Defendants for Violations of Section 20(a) of the Securities Exchange
Act of 1934
163.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
164.

The Individual Defendants, by virtue of their positions with LivePerson and their

specific acts, were, at the time of the wrongs alleged herein, controlling persons of LivePerson and
each of its officers and directors who made the false and misleading statements alleged herein
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within the meaning of § 20(a) of the Exchange Act. The Individual Defendants had the power and
influence and exercised the same to cause LivePerson to engage in the illegal conduct and practices
complained of herein.
165.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
FOURTH CLAIM
Against the Individual Defendants for Breach of Fiduciary Duties

166.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
167.

Each Individual Defendant owed to the Company the duty to exercise candor, good

faith, and loyalty in the management and administration of LivePerson’s business and affairs.
168.

Each of the Individual Defendants violated and breached his or her fiduciary duties

of candor, good faith, loyalty, reasonable inquiry, oversight, and supervision.
169.

The Individual Defendants’ conduct set forth herein was due to their intentional or

reckless breach of the fiduciary duties they owed to the Company, as alleged herein. The Individual
Defendants intentionally or recklessly breached or disregarded their fiduciary duties to protect the
rights and interests of LivePerson.
169.

In breach of their fiduciary duties owed to LivePerson, the Individual Defendants

willfully or recklessly made and/or caused the Company to make false and/or misleading
statements and/or omissions of material fact that failed to disclose, inter alia, that: (1) the
Company’s internal controls pertaining to disclosure controls and procedures were materially
ineffective; (2) the Company failed to maintain internal controls over financial reporting, as they
contained material weaknesses; (3) as a result, the Company failed to disclose the suspension of
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WildHealth’s Medicare reimbursements under the Testing Program and the resulting impact on
LivePerson’s future revenues; and (4) as a further result, the Company exaggerated and overstated
its business prospects and overall financial position. As a result of the foregoing, Defendants’
statements about LivePerson’s business, operations, and prospects were materially false and
misleading and/or lacked a reasonable basis at all relevant times.
170.

The Individual Defendants failed to correct and/or caused the Company to fail to

correct the false and misleading statements and omissions of material fact, thus rendering them
personally liable to the Company for breaching their fiduciary duties.
171.

Also, in breach of their fiduciary duties, the Individual Defendants caused the

Company to fail to maintain internal controls.
172.

In yet further breach of their fiduciary duties, during the Relevant Period, the

Individual Defendants willfully or recklessly caused the Company to repurchase thousands of
shares of its own common stock at artificially inflated prices before the fraud was exposed, while
one of the Individual Defendants engaged in lucrative insider sales, netting proceeds of over
$4,445.
173.

The Individual Defendants had actual knowledge of the misrepresentations and

omissions of material facts set forth herein, or acted with reckless disregard for the truth, in that
they failed to ascertain and to disclose such facts, even though such facts were available to them.
174.

The Individual Defendants had actual or constructive knowledge that they had

caused the Company to improperly engage in the fraudulent scheme set forth herein and to fail to
maintain adequate internal controls. The Individual Defendants had actual knowledge that the
Company was engaging in the fraudulent scheme set forth herein, and that internal controls were
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not adequately maintained, or acted with reckless disregard for the truth, in that they caused the
Company to improperly engage in the fraudulent scheme and to fail to maintain adequate internal
controls, even though such facts were available to them. Such improper conduct was committed
knowingly or recklessly and for the purpose and effect of artificially inflating the price of
LivePerson’s securities. The Individual Defendants, in good faith, should have taken appropriate
action to correct the scheme alleged herein and to prevent it from continuing to occur.
175.

These actions were not a good-faith exercise of prudent business judgment to

protect and promote the Company’s corporate interests.
176.

As a direct and proximate result of the Individual Defendants’ breaches of their

fiduciary obligations, LivePerson has sustained and continues to sustain significant damages. As
a result of the misconduct alleged herein, the Individual Defendants are liable to the Company.
177.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
FIFTH CLAIM
Against the Individual Defendants for Unjust Enrichment

178.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
179.

By their wrongful acts, violations of law, and false and misleading statements and

omissions of material fact that they made and/or caused to be made, the Individual Defendants
were unjustly enriched at the expense of, and to the detriment of, LivePerson.
180.

The Individual Defendants either benefitted financially from the improper conduct,

or received bonuses, stock options, or similar compensation from LivePerson that was tied to the

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performance or artificially inflated valuation of LivePerson, or received compensation or other
payments that were unjust in light of the Individual Defendants’ bad faith conduct.
181.

Plaintiffs, as shareholders and representatives of LivePerson, seek restitution from

the Individual Defendants and seek an order from this Court disgorging all profits, including from
insider transactions, the redemption of preferred stock, benefits, and other compensation, including
any performance-based or valuation-based compensation, obtained by the Individual Defendants
due to their wrongful conduct and breaches of their fiduciary and contractual duties.
182.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
SIXTH CLAIM
Against the Individual Defendants for Abuse of Control

183.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
184.

The Individual Defendants’ misconduct alleged herein constituted an abuse of their

ability to control and influence LivePerson, for which they are legally responsible.
185.

As a direct and proximate result of the Individual Defendants’ abuse of control,

LivePerson has sustained significant damages. As a result of the misconduct alleged herein, the
Individual Defendants are liable to the Company.
186.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
SEVENTH CLAIM
Against the Individual Defendants for Gross Mismanagement

187.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
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188.

By their actions alleged herein, the Individual Defendants, either directly or through

aiding and abetting, abandoned and abdicated their responsibilities and fiduciary duties with regard
to prudently managing the assets and business of LivePerson in a manner consistent with the
operations of a publicly-held corporation.
189.

As a direct and proximate result of the Individual Defendants’ gross

mismanagement and breaches of duty alleged herein, LivePerson has sustained and will continue
to sustain significant damages.
190.

As a result of the misconduct and breaches of duty alleged herein, the Individual

Defendants are liable to the Company.
191.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
EIGHTH CLAIM
Against the Individual Defendants for Waste of Corporate Assets

192.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
193.

The Individual Defendants caused the Company to pay the Individual Defendants

excessive salaries and fees, to the detriment of the shareholders and the Company.
194.

As a further result of the foregoing, the Company will incur many millions of

dollars of legal liability and/or costs to defend unlawful actions (as evidenced, for example, by the
Securities Class Action), to engage in internal investigations, and to lose financing from investors
and business from future customers who no longer trust the Company and its products.

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195.

In addition, the Individual Defendants caused the Company to repurchase

thousands of shares of its own common stock at artificially inflated prices, thereby wasting the
Company’s assets.
196.

As a result of the waste of corporate assets, the Individual Defendants are each

liable to the Company.
197.

Plaintiffs, on behalf of LivePerson, have no adequate remedy at law.
NINTH CLAIM

Against Defendants LoCascio and Collins for Contribution Under Sections 10(b) and 21D
of the Exchange Act
198.

Plaintiffs incorporate by reference and reallege each and every allegation set forth

above, as though fully set forth herein.
199.

LivePerson and Defendants LoCascio and Collins are named as defendants in the

Securities Class Action, which asserts claims under the federal securities laws for violations of
Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 promulgated thereunder. If
and when the Company is found liable in the Securities Class Action for these violations of the
federal securities laws, the Company’s liability will be in whole or in part due to Defendant
LoCascio’s and Defendant Collins’s willful and/or reckless violations of their obligations as
officers and/or directors of the Company.
200.

Defendants LoCascio and Collins, because of their positions of control and

authority as officers and/or directors of the Company, were able to and did, directly and/or
indirectly, exercise control over the business and corporate affairs of the Company, including the
wrongful acts complained of herein and in the Securities Class Action.
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201.

Accordingly, Defendants LoCascio and Collins are liable under 15 U.S.C. § 78j(b),

which creates a private right of action for contribution, and Section 21D of the Exchange Act, 15
U.S.C. § 78u-4(f), which governs the application of a private right of action for contribution arising
out of violations of the Exchange Act.
202.

As such, LivePerson is entitled to receive all appropriate contribution or

indemnification from Defendants LoCascio and Collins.
PRAYER FOR RELIEF
FOR THESE REASONS, Plaintiffs demand judgment in the Company’s favor against all
Individual Defendants as follows:
(a)

Declaring that Plaintiffs may maintain this action on behalf of LivePerson,

and that Plaintiffs are adequate representatives of the Company;
(b)

Declaring that the Individual Defendants have breached and/or aided and

abetted the breach of their fiduciary duties to LivePerson;
(c)

Determining and awarding to LivePerson the damages sustained by it as a

result of the violations set forth above from each of the Individual Defendants, jointly and
severally, together with pre-judgment and post-judgment interest thereon;
(d)

Directing LivePerson and the Individual Defendants to take all necessary

actions to reform and improve LivePerson’s corporate governance and internal procedures to
comply with applicable laws and to protect LivePerson and its shareholders from a repeat of the
damaging events described herein, including, but not limited to, putting forward for shareholder
vote the following resolutions for amendments to the Company’s Bylaws or Certificate of

67


Case 1:24-cv-00598-UA Document 1 Filed 01/26/24 Page 68 of 71

Incorporation and the following actions as may be necessary to ensure proper corporate
governance policies:
1. a proposal to strengthen the Board’s supervision of operations and develop
and implement procedures for greater shareholder input into the policies and
guidelines of the board;
2. a provision to permit the shareholders of LivePerson to nominate at least
four candidates for election to the Board;
3. a proposal to ensure the establishment of effective oversight of compliance
with applicable laws, rules, and regulations;
(e)

Awarding LivePerson restitution from Individual Defendants, and each of

(f)

Awarding Plaintiffs the costs and disbursements of this action, including

them;

reasonable attorneys’ and experts’ fees, costs, and expenses; and
(g)

Granting such other and further relief as the Court may deem just and

proper.
JURY DEMAND
Plaintiffs hereby demand a trial by jury.
Dated: January 26, 2024
THE BROWN LAW FIRM, P.C.
/s/ Timothy Brown_____________
Timothy Brown
Saadia Hashmi
767 Third Avenue, Suite 2501
New York, NY 10017
68


Case 1:24-cv-00598-UA Document 1 Filed 01/26/24 Page 69 of 71

Telephone: (516) 922-5427
Facsimile: (516) 344-6204
Email: tbrown@thebrownlawfirm.net
shashmi@thebrownlawfirm.net
BRONSTEIN, GEWIRTZ & GROSSMAN, LLC
Peretz Bronstein
Eitan Kimelman
60 East 42nd Street, Suite 4600
New York, NY 10165
Telephone: (212) 697-6484
Facsimile: (212) 697-7296
Email: peretz@bgandg.com
eitank@bgandg.com
Counsel for Plaintiffs

69


DocuSign Envelope ID: C0C54A06-E6F6-4EBB-961B-C238CA26D9FC

Case 1:24-cv-00598-UA Document 1 Filed 01/26/24 Page 70 of 71

VERIFICATION
I, Guillermo Marti, am a plaintiff in the within action. I have reviewed the allegations
made in this Shareholder Derivative Complaint, know the contents thereof, and authorize its filing.
To those allegations of which I have personal knowledge, I believe those allegations to be true. As
to those allegations of which I do not have personal knowledge, I rely upon my counsel and their
investigation and believe them to be true.
I declare under penalty of perjury that the foregoing is true and correct. Executed this
__ day of January, 2024.

26

______________________
Guillermo Marti


DocuSign Envelope ID: 42E9E105-98C9-4AA2-A019-5FD1621EDC98

Case 1:24-cv-00598-UA Document 1 Filed 01/26/24 Page 71 of 71

VERIFICATION
I, Felicia Marti JT Ten, am a plaintiff in the within action. I have reviewed the allegations
made in this Shareholder Derivative Complaint, know the contents thereof, and authorize its filing.
To those allegations of which I have personal knowledge, I believe those allegations to be true. As
to those allegations of which I do not have personal knowledge, I rely upon my counsel and their
investigation and believe them to be true.
I declare under penalty of perjury that the foregoing is true and correct. Executed this
__ day of January, 2024.

26

______________________
Felicia Marti JT Ten

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