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Hilton Grand Vacations Inc. (Hilton) and its board of directors have been hit with a lawsuit for allegedly lying to shareholders and misleading them in the company’s acquisition of Diamond Resorts.
The lawsuit was filed on May 7 in New York by lead Plaintiff Marina Clough, who alleges that the company and its board have violated the Securities Exchange Act.
In March, Hilton announced that it had entered into a definitive agreement to acquire Diamond Resorts International, Inc. from funds managed by affiliates of Apollo and Reverence Capital Partners, and other Diamond stockholders, in a stock-based transaction.
According to the lawsuit, a proxy statement recommended that Hilton shareholders vote in favor of the proposed transaction, that would see Apollo Funds and other Diamond stockholders receive 34.5 million shares of Hilton common stock to a value of $1.4 billion.
Upon transaction close, existing Hilton shareholders will own approximately 72 percent of the combined company and the Apollo Funds will own approximately 28 percent of the combined company, according to the lawsuit.
However, the claim states that the proxy statement omits and misrepresents material information concerning Hilton’s and Diamond’s financial projections; the financial analyses performed by Hilton’s financial advisor, Bank of America Securities, Inc. in connection with its fairness opinion; and potential conflicts of interest involving Bank of America (BOA).
The claim says that BOA failed to disclose the true earnings of Diamond Resorts and the true revenue and cost projections, and it also failed to disclose possible conflicts of interest.
“With respect to the [Hilton Grand Vacations] HGV Forecasts, Adjusted Diamond Forecasts, and HGV Pro Forma Forecasts for Combined Company, the Proxy Statement fails to disclose: (1) all line items underlying (i) Total Revenues (Excluding Cost Reimbursements), (ii) Adjusted EBITDA, and (iii) Unlevered Free Cash Flow; (2) Hilton’s, Diamond’s, and the pro forma combined company’s net income projections;1 and (3) a reconciliation of all non-GAAP to GAAP metrics,” the claim states.
According to the lawsuit, disclosure of that information is material because it would provide the company’s shareholders with a basis to project the future financial performance of the Hilton and Diamond Resorts, and would allow shareholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion.
“Shareholders cannot hope to replicate management’s inside view of the future prospects of the Company.”
The deal is expected to close in the summer of 2021. In the event the transaction is consummated, Clough may seek to recover damages resulting from Hilton’s misconduct, the claim states.
Clough is suing for violations of the Securities Exchange Act and seeks an order of enjoinment, possible damages, legal fees, and a jury trial.
Hilton isn’t the only company facing legal action for alleged violations of the Securities Exchange Act. Recently, shareholders of online luxury-goods marketplace The RealReal filed a class action lawsuit alleging that members of the company’s executive team, board of directors, and underwriting banks lied to shareholders, artificially inflating share prices.
Do you hold shares in a company that you think has violated the Securities Exchange Act? Let us know in the comments section!
Clough is represented by Daniel Sadeh and Zachary Halper of Halper Sadeh LLP.
The Hilton Securities Exchange Act Violations Lawsuit is Clough. v. Hilton Grand Vacations Inc., et al., Case No 1:21-cv-02583, in the United States District Court Eastern District of New York.
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57 thoughts onHilton and Its Board Made False Statements to Shareholders About Diamond Resorts Acquisition, Lawsuit Claims
Where do I sign up to enter in to this lawsuit against HGV?
Let me know too. I have diamond timeshare and they want me to buy new timeshare w Hilton or they will force me into not having any available locations.
Was anyone able to get out of the time share being that there is a lawsuit for this?
Exactly our experience. We joined December 2021 and have found everything ever said was a lie. We went to a new member orientation thinking they were going to review how to use the program. The guy there couldn’t even figure out how to register us online, let alone how to use the reservation site. we were just there to buy more into the program. I feel soooooo duped and mad at myself!!!
This is the same thing they did when they bought out Grand Monarch Resorts and now this. How do I get out of this mess?
I became a member in Nov 21’
Everything they told me at the presentation was a lie, I went today for a new member appointment and they’re pushing hard for me to leave the trust and transition into Hilton , apply for a Hilton Amex and all.
Trying to make me pay another 24k in ten years. This is outrageous. They’re also saying 75 percent of Diamond owners have transitioned and my maintenance fees will go up by triple next month
I feel we got ripped off into lies !!
OMG this just happened to us today. If we want to use HGV, we have to BUY into the transition for only another $15+k. I am appalled that this can happen. My husband and I would love in on this lawsuit. We want OUT, too. They didn’t even want to talk to us when they found out we weren’t buying anymore. They walked away from the desk without a word said. We bought an additional sampler in 2019 after being stuck in the meeting for 8 hours, Covid hit and we lost them all but they got the money for it. I am sooooooo angry about how much we’ve lost.
We want out!
I have payed into my timeshare for 9 years and only used it once the accommodations we nice but not what we are promised and even though I through out about 2,000 a year I still had to pay 600 to stay a week in Dana piont
I have a situation where I have had a resort for over 20 years and they offered me a conversion. Come to find out they are making me still pay the HOA dues for the old resort and mislead me to believe I was essentially trading in my ownership for the new club points program and the new club dues. How does a one pay dues on a property I no longer own?
Exactly what they told me also Brandon. I was offered a conversion then still charged for my old Diamonds membership loan and maintenance fees. How the hell is that a conversion??? I feel like I was scammed.
I have information that can add to this class action on the Diamond resorts end of the deal. Diamond resorts has been selling contracts for points in their timeshare resorts since 2019 with false allegations eluding to what your Diamond Resorts points will get an owner with the Hilton deal since 2019.
HGV is a money making machine profiting and caring less about the owners or the employees. It’s all about shareholder and executive profitability. Making false promises to owners. Availability to owners is awful. Thus the In-house shisters you need to buy more. You’re paying what interest rate get another Amex card insanity beyond insanity. The in-house in Myrtle Beach have no conscious. The Holiday Inn new management Team in particular Roger Gorby John Gibbs have no soul. They are the definition of lie and deceit and HGV rewards them for perfecting the deceit they accomplish each and every day. Numbers are good says corporate keep doing what you are doing. Maddening! Ripping people off for a living. They all belong behind bars. HGV will lose they violated the SEC laws failure to disclose. HGV is about to go down along with BOFA. Get OUT while you can and lawyer up to get out of your HGV contract claiming FRAUD!
Great advice. I hope you are correct. Hikton Grand vacations is take take take bill more more more for maintenance fees. And employ convicted felons. If you are an owner look up your sales rep. Cancel your contract for fraud
Great advice. I hope you are correct. Hikton Grand vacations is take take take bill more more more for maintenance fees. And employ convicted felons. If you are an owner look up your sales rep. Cancel your contract for fraud
Spot on 💯
Not sure if this is the appropriate place to post but I am appalled at how Diamond resorts are now resorting to bare faced lying to get people to buy into Hilton. I was told about fractional ownership and that I had to invest more money to be eligible for the ‘new program’ starting next year. In other words my diamond points would roll over and I would no longer be paying a maintenance fee. Not only that, but I would then have equity which Hilton would reimburse me for should I decide to exit the program. Offers that are too good to be true, are. How are these people even allowed to operate? they should be shut down for good.
They have been LiARS for a long time in my experience, nothing new. Hilton acquired Diamond so they can now twist those owners into buying more points to “somehow” enter as a valid member! All BS!! do Not fall for it! it is all a LIE!