Johnson Fistel, LLP Secures Sweeping Reforms for Aterian, Inc.

             On March 17, 2023, the Honorable Victor Marrero, United States District Court Judge for the Southern District of New York, granted final approval of a shareholder derivative settlement which resolved consolidated shareholder litigation brought on behalf of nominal defendant Aterian, Inc. against certain of the company’s current and former directors and officers.

              The consolidated litigation alleged that these directors and officers: (i) misrepresented and overstated the artificial intelligence capabilities and the ability to automate fulfillment and logistics operations of the company’s proprietary software, AIMEE; (ii) concealed from investors that the company was engaged in marketing practices prohibited by the e-commerce platform on which Aterian heavily relied to sell its goods, jeopardizing a main source of revenue; and (iii) as a result of the foregoing, caused substantial economic harm to Aterian, thereby breaching their fiduciary duties owed to Aterian.

              The settlement requires implementation of certain corporate governance reforms for a period of five years, including: (i) creation of a new compliance function; (ii) implementation of enhanced director independence standards; (iii) imposition of limitations of Board and Audit Committee membership on other public companies; and (iv) continuation of the company’s stock ownership guidelines.  These reforms are designed to ensure the company’s disclosures are accurate and the company’s internal controls are effective.

              According to Judge Marrero’s final approval order, the settlement, including the corporate governance reforms, is “in the best interests of Aterian and Current Aterian Stockholders.”

             Johnson Fistel served as lead counsel and Johnson Fistel partners Michael I. Fistel, Jr. and Mary Ellen Conner led the prosecution of the litigation and helped achieve this excellent result on behalf of Aterian and its stockholders.

Zhang v. Sarig et al., Lead Case No. 1:21-cv-8657 (S.D.N.Y.).

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