FSD Pharma Inc. (CSE: HUGE, OTC: FSDDF, FRA: 0K9)
Ontario Superior Court of Justice, Court File No.: CV-19-00614981-00CP
This securities class action relates to the Defendants releasing core and non-core documents which contained omissions of material fact about the status and delays of the build-out of FSD Pharma’s 620,000 square foot building in Cobourg, Ontario (the “JV Facility”), which was to be renovated pursuant to an agreement between FSD Pharma and Auxly Cannabis Group, Inc (“Auxly”). The Plaintiff further alleges that the value and price of FSD Pharma’s Class B common shares were artificially inflated after the Defendant released each impugned statement alleged to contain a misrepresentation.
On January 8, February 6 and February 8, 2019, the Defendants released statements revealing that Auxly was materially behind schedule and the JV Facility phase one build-out would not be completed until sometime during 2019, that the agreement with Auxly had been abruptly terminated, and that FSD Pharma had terminated its CEO. These public corrective statements resulted in the price for FSD’s Class B common shares dropping in price from $0.355 to $0.28 a share, a decrease of over 21%.
On April 14, 2020, the Honourable Justice Edward M. Morgan endorsed a modification to the timeline for these proceedings. The endorsement can be found here.
On June 23, 2020, the motion for leave to proceed was heard in a one-day hearing via videoconference. On July 21, 2020, the Honourable Justice Morgan released his decision granting leave to proceed, as well as dismissing FSD’s motion to strike certain evidence for use on that motion. The parties are negotiating the costs of the motions. No appeal has yet been filed.
This action will now proceed to discovery as against FSD.
Claim or Motion for Authorization issued: February 22, 2019
Class Period: September 20, 2018 to and including February 8, 2019, but the statutory claim is being advanced for the November 29, 2018 through February 7, 2019 period
Judge: The Honourable Edward M. Morgan
Motion Record in Support for Statutory Claim Filed: The hearing for “leave to proceed” occurred on June 23, 2020, via, video-court