SmileDirectClub Directors Hid Risk to Get Rich in IPO: Suit (1)

SmileDirectClub Inc.’s directors were hit with a Delaware lawsuit claiming they got rich selling stock at above-market prices during its initial public offering, even as shares crashed to 40% of their opening value on news the company concealed state enforcement actions.

The web-based teeth-straightening pioneer went public at $23 a share in September through an “up-C” IPO, which involves transforming an existing limited liability company into a subsidiary of a newly formed corporation.

After the company issued 59 million shares, its price plunged 25% the first day, nearly 50% within two weeks, and eventually down to $9 a share, according ...