Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven Steinman, Randi Lally, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.
In Diem-II, LLC and Diem-III, LLC v. Maisonette (Mar. 4, 2026), the Delaware Court of Chancery, at the pleading stage of litigation, rejected dismissal of the plaintiffs’ claims that they had been fraudulently induced to invest in the Series C and D financing rounds of Maisonette Inc. (the “Company”). The Company had provided the plaintiffs with unaudited financial statements and, after the plaintiffs invested, they learned that, while they were conducting due diligence, the Company had restated its financial statements. The restatement reflected lower earnings-based results than were reflected in the financial statements that had been provided to the plaintiffs. The plaintiffs claimed that the Company, its directors, its CFO, and the private equity fund that was its largest stockholder (the “Stockholder”), in order to induce the plaintiffs to invest, had intentionally provided financial statements that they knew were “not entirely accurate.”
