Namaste Technologies Inc. (TSXV: N, FRA: M5BQ, OTC: NXTTF)
Ontario Superior Court of Justice, Court File No.: CV-18-00078184-00CP
This securities class action relates to the Defendants releasing core documents and making public statements containing misrepresentations by omitting material facts regarding Namaste’s divesture of Dollinger Enterprises US Inc. (Namaste’s U.S. division). The Plaintiff, personally and on behalf of the Class he seeks to represent, alleges that Namaste’s share price and value were artificially inflated after market-close on November 28, 2017, when Defendant Sean Dollinger on behalf of the Company, released a statement on SEDAR with a follow-up conference call pertaining to the supposed arm’s-length divestiture of Dollinger Enterprises US, Inc. to ESC Hughes Holding Limited (“ESC”) (now known as BKN Calla Investments), an alleged European based group of investors.
On October 4, 2018, the Plaintiff alleges that the first corrective disclosure was released revealing that ESC is, in fact, owned by Namaste’s Human Resources Manager, and highlighting the alleged accounting irregularities. The release of this first corrective disclosure caused the price for Namaste’s shares to drop 10% on the TSXV and Frankfurt stock Exchanges.
On October 16, 2018, investing website SeekingAlpha released the second corrective disclosure which identified that ESC had immediately transferred the assets of Dollinger Enterprises US Inc., which it had purchased for a mere $400,000, to Lifted Innovations Inc. (or Lifted Technology, Inc.) for 35 million shares, which within weeks increased in price by two thousand percent. The release of this second corrective disclosure caused the price for Namaste’s shares to drop 8% on the TSXV.
On November 20, 2019, the Canadian and US investors reached a settlement whereby they agreed to accept 100% of remaining directors and officers’ insurance.
Under Canadian provincial laws, the amount of damages recoverable from corporations is limited to 5% of its market capitalization. Morganti & Co. measured the 5% limit to be CAD $5.6 million. Albert Pelletier, the lawyer representing the shareholders, stated that, “A recovery of CAD $2.8 million represents a 50% recovery; and the best possible outcome for the class of shareholders. We believe that many shareholder class members are still investors in Namaste and, as such, they have a vested interest to see Namaste succeed.”
Claim or Motion for Authorization issued: October 19, 2018
Class Period: November 29, 2017 to and including October 3, 2018 or October 15, 2018
Motion Record in Support for Statutory Claim Due: November 29, 2020
Shareholders’ Canadian Counsel: Andrew Morganti and Albert Pelletier, Morganti & Co.
Corporate Defendants’ Canadian Counsel: Linda Fuerst, Norton Rose Fulbright, and Susan Kushneryk, Hansell McLaughlin Advisory Group
Further Court Hearing Date(s): Motion for approval fo the settlement is scheduled for March 2, 2020, with Justice Robert Smith. If approved, investors will have the ability to submit a claim to recovery money.