NEW YORK--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP (http://www.rgrdlaw.com/cases/canntrust/) today announced that a class action has been commenced on behalf of purchasers of CannTrust Holdings Inc. (NASDAQ:CTST) common stock during the period between February 25, 2019 and July 12, 2019 (the “Class Period”). This action was filed in the Southern District of New York and is captioned Jones v. CannTrust Holdings Inc., et al., No. 19-cv-6883.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased CannTrust common stock during the Class Period to seek appointment as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from July 10, 2019. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at bcochran@rgrdlaw.com. You can view a copy of the complaint as filed at http://www.rgrdlaw.com/cases/canntrust/.
The complaint charges CannTrust and certain of its officers with violations of the Securities Exchange Act of 1934. CannTrust is a “Licensed Producer” of medicinal cannabis under Canada’s Access to Cannabis for Medical Purposes Regulations. According to CannTrust, it has sought and received its ACMPR Licenses for two facilities, one located in Pelham, Ontario (the “Niagara Facility”) and the other located in Vaughan, Ontario (the “Vaughan Facility”). On February 25, 2019, CannTrust began listing its common stock on the NYSE, and in May 2019, defendants conducted a public offering of CannTrust common stock, selling more than 36 million shares at $5.50 per share for nearly $200 million in gross proceeds.
The complaint alleges that prior to and throughout the Class Period, defendants made false and misleading statements and/or omitted adverse information regarding CannTrust’s business and operations. Specifically, defendants failed to disclose, among other things, that the Company had violated Canadian law by planting, growing, and harvesting cannabis at five unlicensed grow rooms at the Niagara Facility between October 2018 and March 2019; that the Company had provided misleading information to Health Canada about its compliance with applicable cultivation regulations and had installed fake walls at the Niagara Facility in order to conceal its illegal growing activities; that the Company’s reported sales, revenues, earnings, and net income since October 2018 had been artificially inflated by the inclusion of illicit proceeds from illegal cannabis cultivation; and that, as a result, the Company faced significant undisclosed legal and regulatory risks that imperiled its ability to grow and sell cannabis products and continue its expansion plans. As a result of this information being withheld from the market, the price of CannTrust stock was artificially inflated to more than $10 per share during the Class Period.
On July 8, 2019, the Company revealed that Health Canada had discovered in an audit that CannTrust had been growing cannabis in five unlicensed rooms at the Niagara Facility over a six-month period and had provided misleading information to a regulator. The Company also announced that Health Canada had placed a hold on a significant quantity of CannTrust’s cannabis inventory. On this news, the price of CannTrust common stock declined more than 22%. Two days later, a whistleblower alleged that CannTrust had created fake walls in the Niagara Facility to conceal from regulators that it was growing cannabis in unlicensed rooms, indicating that CannTrust could potentially face not only fines and criminal charges, but stiffer penalties, up to and including the loss of its licenses to operate, which would pose an existential threat to the Company.
Then, on July 12, 2019, CannTrust announced that it had implemented a voluntary and indefinite hold on all of its products pending an internal review and the results of the investigation by Health Canada. On this news, the price of CannTrust common stock fell to a close of $2.58 per share on July 12, 2019, a one-day decline of more than 17% and a greater than 50% decline from the price at which defendants had sold $200 million worth of CannTrust stock to the investing public only two months earlier.
Plaintiff seeks to recover damages on behalf of all purchasers of CannTrust common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
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