Sundial Growers Hit With Class-action Lawsuit For Allegedly Misleading Investors

(RTTNews) - A U.S.-based law firm has filed a class-action lawsuit against Sundial Growers Inc., alleging that the Canadian cannabis company failed to disclose key information regarding supply and quality control issues ahead of its initial public offering or IPO this summer.

Rosen Law Firm, an investor rights law firm, said it has filed a class action lawsuit on behalf of investors who purchased shares of Sundial Growers during the Calgary-based company's IPO in August 2019.

The lawsuit seeks to recover damages for Sundial investors under the federal securities laws.

Sundial went public on the Nasdaq on August 1 2019, offering its shares at a price of $13.00 per share. The company, which offers its products under the Sundial, Top Leaf, and BC Weed Co. brands, raised more than $140 million in its IPO.

According to the lawsuit, Sundial's registration statement contained false as well as misleading statements and failed to disclose key information.

Sundial did not allegedly disclose to potential investors that it failed to supply saleable cannabis in line with contractual obligations to one of its customers, Zenabis Global Inc.

The company also did not disclose that Zenabis had to return or reject 554 kilograms of cannabis to Sundial due to material quality issues. The rejected cannabis was valued at about $1.9 million.

As a result, the lawsuit alleges that the Sundial's statements about its business operations as well as prospects were materially false and misleading, or lacked a reasonable basis at all relevant times.

Investors suffered damages when the true details entered the market, the lawsuit claims.

After news of the contaminated shipment broke in August, Sundial's shares fell well below the IPO price of $13 and have not yet returned to that level.