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Lawsuit filed for Investors in shares of Sundial Growers Inc. (NASDAQ: SNDL)

10-02-2019 05:41 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Shareholders Foundation

A lawsuit was filed on behalf of investors in Sundial Growers Inc. (NASDAQ: SNDL) shares over alleged securities laws violations.

A lawsuit was filed on behalf of investors in Sundial Growers Inc. (NASDAQ: SNDL) shares over alleged securities laws violations.

An investor, who purchased shares of Sundial Growers Inc. (NASDAQ: SNDL), filed a lawsuit over alleged violations of Federal Securities Laws by Sundial Growers Inc. in connection with Sundial’s August 1, 2019 initial public stock offering (the “IPO”).

Investors who purchased shares of Sundial Growers Inc. (NASDAQ: SNDL) have certain options and for certain investors are short and strict deadlines running. Deadline: November 25, 2019. NASDAQ: SNDL investors should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 - 1554.

On August 1, 2019, SUNDIAL GROWERS INC. (NASDAQ: SNDL) closed its initial public offering (“IPO”), selling 11 million shares at $13 per share, for gross proceeds of $143 million. SUNDIAL GROWERS INC. represented that it was a producer of "high-quality cannabis in small batches" and "we produce high-quality, consistent cannabis". Furthermore, SUNDIAL GROWERS INC. purported to warn about risks of failure of the Company's quality control systems, contamination of, or damage to, its cannabis inventory.

On August 14, 2019, cannabis producer Zenabis disclosed that "[c]ertain third-party producers failed to supply saleable cannabis in line with contractual obligations. Due to quality issues, Zenabis had to return or reject a total of 554 kg of cannabis from a third-party. To ensure there was sufficient inventory on-hand in order to provide consistent supply to provincial counterparties beyond June of 2019, Zenabis held back certain products it had produced in May and June. Subsequent to the quarter end, Zenabis provided notice to terminate its agreement to purchase cannabis from the third-party who shipped the cannabis that was not saleable."
On August 19, 2019, Marketwatch published a story titled "Wall Street's latest billion-dollar pot company had a half-ton of bad weed returned as it was going public". The article 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 SNDL, -0.85% 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$5per gram."
"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. In 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."
On August 19, 2019, SUNDIAL GROWERS INC. issued a statement in response stating: "Sundial is aware of an online article involving a commercial relationship with another Licensed Producer. There were factual inaccuracies in the article. While Sundial cannot comment on specific customer agreements due to contractual confidentiality, we can confirm that this isolated immaterial matter is being resolved between Sundial and the Licensed Producer. There is no impact on Q2 financial reporting and we anticipate that the impact on Q3 earnings will be negligible. Sundial follows strict Good Production Practices (GPP) in accordance with all Health Canada standards. Our company also uses standard provisions for potential returns which is consistent with industry practice. Sundial is committed to producing safe, innovative and high-quality products."

Shares of SUNDIAL GROWERS INC. (NASDAQ: SNDL) closed on August 23, 2019 at $9.64 per share.

The plaintiff claims that the defendants made false and/or misleading statements and/or failed to disclose that Sundial Growers Inc failed to supply saleable cannabis in line with contractual obligations to Zenabis Global Inc, that due to material quality issues, Zenabis had to return or reject a total of 554 kg of cannabis to Sundial, valued at approximately U.S. $1.9 million (C$2.5 million), and that as a result, defendants’ statements about Sundial’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

Those who purchased shares of Sundial Growers Inc. (NASDAQ: SNDL) have certain options and should contact the Shareholders Foundation.

Media Contact:
Michael Daniels
Shareholders Foundation, Inc.
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
Tel: +1-(858)-779-1554
E-Mail: mail@shareholdersfoundation.com

About Shareholders Foundation, Inc.
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, and an investor advocacy group, which does research related to shareholder issues and informs investors of securities class actions, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

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