SeaChange International

Kurta Law is investigating potentially unsuitable recommendations of SeaChange International stock to investors. This high-risk investment may not have been suitable for many investors. Securities regulations like FINRA Rule 2111 and Regulation Best Interest require brokers to recommend investments that adequately suit their clients’ risk profiles.

Speak to a securities attorney today by contacting our team at (877) 600-0098 or emailing info@kurtalawfirm.com for a no-cost case evaluation.

What is SeaChange International?

According to the prospectus, SeaChange International, Inc. (SEAC) provides software products and services for the creation and distribution of video and advertising content, e.g., video-on-demand programming. Its customers reportedly include telecommunications companies and broadcasters.

SeaChange International was delisted from the Nasdaq Stock Market in August 2023.

What are the Risks Associated with SeaChange International?

In its stock prospectus, SeaChange International describes the major risks that investors should take into consideration before investing. However, investors should also know that a prospectus doesn’t provide an exhaustive list of risks.

Immediate and Potential Dilution

According to the prospectus, the public offering price of $1.85 per share of common stock exceeded the net tangible book value per share. This difference in price would result in a dilution of $0.99 per share upon the consummation of the offering.

Any future stock offerings made by SeaChange will also dilute stockholders’ ownership, and the company notes that these offerings may be necessary to execute its future plans.

Network Security Breaches

The prospectus states that SeaChange’s reputation and operations could be negatively affected by cyberattacks, network security breaches, and other breaches of its IT infrastructure. It also discloses that the company suffered a ransomware attack in 2021, which “did not have a material adverse effect on [its] business operation.”

Future attacks, however, could compromise confidential employee or customer information.

Use of Proceeds

SeaChange describes its plans for the proceeds from its offering as “working capital, potential acquisitions and other business opportunities,” but also notes that it will have “significant discretion and flexibility in applying the net proceeds of this offering.”

Because of this flexibility, investors will not be able to evaluate how management applies these proceeds before making their investment.

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Do You Have Concerns Related to Your Shares of SeaChange International?

If you believe SeaChange International was too risky for your risk profile, consider reaching out to a Kurta Law securities attorney today. Our securities attorneys have experience navigating FINRA arbitration and securing fair settlements for clients. Call (877) 600-0098 or email info@kurtalawfirm.com.