Printer Kornit Knew of Customer-Competitor Pact, Investor Says

Apparel and textile printing company Kornit Digital Ltd. inflated its share price by failing to disclose that quality and customer service issues drove two major customers to collaborate with a rival printer, an institutional investor alleges.

“Kornit repeatedly touted the purported competitive advantages provided by its technology and assured investors that it faced virtually no meaningful competition in the ‘direct-to-garment’ printing market,” the Genessee County, Mich., retirement fund says.

It filed its complaint Wednesday in the US District Court for the District of New Jersey.

But Kornit knew or should have known it was losing market share to competitors because ...