On July 6, 2023, a proposed securities misrepresentation class action was commenced in the Ontario Superior Court of Justice against Canopy Growth Corporation, its directors and senior officers, KPMG LLP and two of BioSteel Sports Nutrition Inc.’s senior officers and directors. The proposed class action is brought on behalf of investors who acquired Canopy’s shares from May 31, 2022 to June 22, 2023 (the “Class Period”).
Canopy operates a cannabis and consumer packaged goods (“CPG”) business. One of Canopy’s key CPG businesses is its BioSteel brand of sports nutrition and hydration products, including ready-to-drink products. The Plaintiff alleges that during the Class Period the Defendants, among other things, misrepresented BioSteel’s revenue by overstating BioSteel revenue materially and misrepresented the effectiveness of Canopy’s internal control over financial reporting.
The Plaintiff further alleges that the misrepresentations were corrected: (i) on May 10, 2023 when Canopy announced, preliminarily, that it had identified material misstatements in its prior financial statements related to revenue recognition in its BioSteel business unit, that it was assessing its internal controls over financial reporting and would likely report one or more material weaknesses in its internal controls over financial reporting; and (ii) on June 22, 2023, when Canopy restated BioSteel revenue and related financial metrics in its prior financial statements revealing the full extent of the material overstatement of BioSteel revenue and confirmed the material weaknesses in Canopy’s internal control over financial reporting (among other things). The Plaintiff asserts that following these public corrections, the market value of Canopy’s shares on the TSX and NASDAQ plummeted causing the Plaintiff and other investors significant losses.
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FAQs
What is a class action?
A class action is a lawsuit that is brought by one or more persons on behalf of a larger group of people whose claims share common legal and/or factual issues. Class actions provide a cost-effective way for groups of people with common interests to pursue a legal claim.
What does “certification” mean?
Certification is the motion where the court determines whether the action can properly be pursued as a class action. The court will consider factors such as whether the claims of the class members raise common legal and/or factual issues and whether a class action is the preferable method of pursuing the claims (as opposed to other methods, such as individual actions).
Do I have to pay anything to participate in the class action?
Class action lawyers are usually paid on a contingency basis. This means that class counsel are only paid if successful. Class counsel are paid a percentage of any settlement or court award. Class counsel fees are subject to court approval.
Can I join the class action?
There are no steps required to “join” the class action. Assuming you fall within the scope of the class definition, you are automatically included in the class action unless you “opt-out” (exclude yourself from the class action).
Can I opt-out of the class action?
Yes. Once the class action has been authorized or certified, you will have the opportunity to opt-out of the class action within a period of time to be determined by the Court. If you exclude yourself, you will not be entitled to any compensation awarded under a settlement agreement or court order. You may however pursue your own action on an individual basis.
Generally, class members will wish to exclude themselves from a class action if they intend to bring their own individual action. In the majority of cases, it will be more economical to participate in the class action because the legal costs will be shared among a very large number of people.
I still have a question. Who should I contact?
If you have any other questions, please complete the contact form below or call 877.672.2121