(CN) – Investors claim in a class action that Toronto-based e-commerce cannabis company Namaste Technologies misled shareholders about the sale of its U.S. subsidiary.
The lawsuit was filed in the U.S. District Court for Central California against Namaste and several of its executive officers on behalf of anyone who bought the company’s stock from Nov. 29, 2017, to Oct. 4, 2018. The Canadian company currently has e-commerce sites in 26 countries, trading on the TSX Venture Exchange in Canada and the OTC Market in the U.S.
On Nov. 28, 2017, the company announced the $400,000 sale of its wholly-owned subsidiary Dollinger Enterprises US Inc. to a European group. The class claims Dollinger was actually sold to a Namaste executive while being touted as an “arm’s length transaction.”
Meanwhile, an article published by Citron Research on Oct. 4, 2018, alleged that the promised Nasdaq listing of Namaste was “fake” and a ploy to entice investors into buying Namaste stock while also claiming that CEO Sean Dollinger falsely portrayed the sale of the subsidiary, effectively committing securities fraud. “Namaste has lied to its shareholders, Canadian Regulators, US Regulators; and most of all has attempted to hide US assets from the Justice Department in an attempt to obtain a US listing,” the Citron report says.
Following Citron’s report, Namaste stock fell $0.19 per share to close at $1.62 per share on Oct. 5, 2018. The lawsuit is also questioning $2.6 million in “inexplicable consulting fees” Namaste allegedly pays out to undisclosed parties.
Seeking damages, investors are represented by Patrick V. Dahlstrom of Pomerantz LLP in Chicago and Peretz Bronstein of Bronstein, Gerwitz & Grossman, LLC in New York.