NEW YORK, NY / ACCESSWIRE / November 18, 2019 / Pomerantz LLP announce that a class action lawsuit has been filed against Sundial Growers Inc. ("Sundial" or the "Company") (NASDAQ: SNDL) and certain of its officers. The class action, filed in United States District Court, for the Southern District of New York, and docketed under 19-cv-10157, is on behalf of a class consisting of investors who purchased or otherwise acquired Sundial common shares pursuant and/or traceable to the Company's Registration Statement issued in connection with Sundial's August 1, 2019 initial public share offering (the "IPO" or "Offering"), seeking to recover compensable damages caused by Defendants' violations of the Securities Act of 1933 (the "Securities Act").
If you are a shareholder who purchased Sundial common shares pursuant and/or traceable to the Company's Registration Statement issued in connection with Sundial's August 1, 2019 IPO, you have until November 25, 2019, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
Sundial purports to produce and market craft pioneering cannabis brands to "Heal, Help and Play." Sundial operates five facilities, including two facilities in Alberta, Canada, and three in the United Kingdom, and as of August 2019, was building a third Canadian facility in British Columbia.
In August 2019, Defendants held the IPO, issuing approximately 11 million Sundial common shares to the investing public at $13.00 per share, pursuant to the Registration Statement.
The Registration Statement represented that Sundial was a producer of "high-quality cannabis in small batches" and that "we produce high-quality, consistent cannabis" and that the Company's operating model results in "strong customer loyalty."
The Complaint alleges that these representations were untrue statements of material fact because, before the IPO, due to material quality issues, Zenabis Global Inc. ("Zenabis"), a Sundial customer, had returned or rejected a total of 554 kg of cannabis (approximately 1,221 pounds) to Sundial. Indeed, the cannabis shipped by Sundial to Zenabis was low quality and was returned to Sundial. These representations in the Registration Statement contained untrue statements of material fact because, before the IPO, Sundial's quality control systems had already been negatively impacted as Sundial had already experienced a material failure or deterioration of such quality control systems, and Sundial's quality control systems failed to operate effectively and successfully. Indeed, at the time of the IPO, Sundial failed to disclose that: (1) Sundial failed to supply saleable cannabis in line with contractual obligations to Zenabis; and (2) due to material quality issues, Zenabis had to return or reject a total of 554 kg of cannabis from Sundial, valued at approximately U.S. $1.9 million (C$2.5 million).
On August 16, 2019, MarketWatch published an article that stated, in part, that the "newest cannabis company on Wall Street, Sundial Growers Inc., sold a half ton of pot that was returned by corporate buyer Zenabis Global Inc. because it contained visible mold, parts of rubber gloves and other non-cannabis material, according to people familiar with the matter. The attempted sale would be the equivalent of 10% of Sundial's total second-quarter cannabis sales of five metric tons. The batch of cannabis would be worth roughly C$2.5 million ($1.9 million), assuming a price of C$5 per gram."
The MarketWatch article also stated that the Company "included a number of risks around inventory spoilage in its IPO filing but not did not include a reference to a half ton of returned cannabis. Sundial did not mention the half-ton return during a road show presentation in Toronto, according to one investor who heard the pitch." Additionally, "[i]n the IPO filing and its quarterly earnings filing with the Securities and Exchange Commission, the company disclosed about $3.3 million in penalties for not delivering cannabis as promised to partners; those contingencies were from 2018."
Since the IPO, and as a result of the disclosure of material adverse facts omitted from Sundial's Registration Statement, Sundial's share price has fallen substantially below its IPO price, damaging Plaintiff and Class members.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
SOURCE: Pomerantz LLP
View source version on accesswire.com: