TORONTO — Law firm Koskie Minsky LLP says it has filed a proposed class action against cannabis company Aphria Inc. and its chief executive and financial officers after the company was targeted by short-sellers.
The firm says the lawsuit alleges the company made false and misleading statements related to its acquisition of LATAM Holdings Inc., had improper disclosure controls and procedures, and that company insiders benefited from the deal. None of the claims have been tested in court.
The proposed class action comes after short-sellers Quintessential Capital Management and Hindenburg Research alleged in early December that the cannabis grower’s acquisition of the LATAM Holding assets in Colombia, Argentina and Jamaica totalling $280 million from Scythian Biosciences were “largely worthless.”
Koskie Minsky says the short-seller action led the company’s share price on the Toronto Stock Exchange to drop from a close of $10.51 on Nov. 30 to a low of $5 on Dec. 5. It says it is filing the class action on behalf of investors who held Aphria shares between July 17 and Dec. 3.
Aphria said on Dec. 6 that it had set up a special committee of independent directors to review the acquisition. The company did not immediately respond to a request for comment on the proposed class action.
The company’s share price was trading up 48 cents, or about 6.6 per cent, at $7.80 in afternoon trading on the Toronto Stock Exchange.