On Thursday, the Southern District of New York issued an order granting the plaintiffs’ motion for class action in the case of In re Aphria, Inc. Securities Regulation. The order certified the class as shareholders who purchased Aphria Inc. securities between July 17, 2018 and April 12, 2019.
The plaintiffs’ memorandum in support of class certification states that each member of the class suffered damages when they purchased Aphira stock at artificially inflated prices due to Aphira’s misrepresentation about the acquisition of a series of assets for $193 million (LATAM Assets).
The memorandum states that Aphira was a Canadian cannabis company that sought to drive value for shareholders through international expansion. The plaintiffs state that Aphira purported that the LATAM Assets were cannabis businesses across Latin America and the Caribbean that would grow Aphira’s international presence and provide value to shareholders.
However, the memorandum states that on December 3, 2018, Hindenburg Research and Quintessential Capital Management issued a report with conclusive evidence that the LATAM Assets were not what Aphira represented, and the assets were barely operational, and in some cases, not even licensed to do the business.
Following the report, Aphira’s stock plummeted to $4.51 per share from a previous closing price of $7.90 representing a total market capitalization loss of more than $220 million. The Memorandum further states that on February 15, 2019, a Special Committee created by Aphira’s board of directors announced that an investigation revealed that several Aphira insiders had a conflict of interest in the LATAM Assets acquisition that was not reported resulting in another stock plummet resulting in an additional $97.5 million market capitalization loss.
The plaintiffs argue that their claims and damages are identical in nature making the lawsuit particularly suited for class action treatment. In the court’s order, Judge George Daniels granted the plaintiffs’ motion, certified the class and appointed Levi & Korinsky, LLP as class counsel after considering the plaintiffs’ memorandum and receiving no opposition to the motion.
Aphira is represented by Quinn Emanuel Urquhart & Sullivan, LLP and Latham & Watkins, LLP.
