In re CannTrust Holdings Inc. Securities Litigation

Updated: January 14, 2022
Status: Settled

Labaton Sucharow LLP is lead counsel in a U.S. class action brought against CannTrust Holdings Inc. (“CannTrust”) and others (“U.S. Class Action”) on behalf of a proposed class (the “U.S. Settlement Class”). The U.S. Court has appointed Granite Point Master Fund, LP and Granite Point Capital Scorpion Focused Ideas Fund to serve as Lead Plaintiffs.

CannTrust is a publicly traded company and its shares were primarily traded on the Toronto Stock Exchange and on the New York Stock Exchange. Its share price declined following the announcement by CannTrust on July 8, 2019, that it had received a compliance report from Health Canada notifying it that its greenhouse facility in Pelham, Ontario was non-compliant with certain regulations as a result of observations by the regulator regarding the growing of cannabis in five unlicensed rooms and inaccurate information provided to the regulator by CannTrust employees. Class actions in Canada and the United States were commenced against, among others, CannTrust, certain of its directors and officers, the underwriters of its May 2019 share offering, and its auditors, KPMG LLP.

The U.S. Complaint, filed on June 26, 2020, asserts claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933.  Among other things, the U.S. Complaint alleges that Defendants made materially false and misleading statements and omissions concerning CannTrust’s compliance with relevant cannabis regulations and an alleged scheme to increase the Company’s cannabis production. The U.S. Complaint’s Exchange Act allegations allege that the price of CannTrust publicly traded common stock was artificially inflated as a result of Defendants’ allegedly false and misleading statements, and declined when the truth was allegedly revealed from July 8, 2019, through September 17, 2019. The U.S. Complaint’s Securities Act allegations allege that the Company’s registration statement and related documents incorporated therein issued in connection with the Company’s Offering Shares contained materially false and misleading statements, allegedly injuring investors when the truth was revealed.

U.S. Class Action Lead Plaintiffs, Ontario Class Action Lead Plaintiffs, and defendant CannTrust and several other defendants have reached eight proposed settlements of the majority of the claims in the U.S. Class Action, as well as actions pending in Canada and California (collectively with the U.S. Class Action, the “Actions”), in amounts totaling approximately C$83,000,000 in exchange for releases of liability (the “Settlements”). The proposed Settlements will be implemented pursuant to an amended and restated plan of compromise, arrangement and reorganization of CannTrust, CannTrust Inc. and Elmcliffe Investments Inc. (as may be further amended from time to time in accordance with its terms), pursuant to Canada’s Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended, (the “CCAA Plan”), which was approved by the Ontario Superior Court of Justice (Commercial List) by a “sanction order” entered on July 16, 2021 (the “CCAA Sanction Order”).

The Court in charge of the U.S. Class Action is the United States District Court for the Southern District of New York, and the case is known as In Re: CannTrust Holdings Inc. Securities Litigation, Civil Action No. 1:19-cv-06396-JPO. The U.S. Class Action is assigned to the Honorable J. Paul Oetken, United States District Judge.

Submit Claim Form

If you purchased the publicly traded common stock of CannTrust on the secondary market or pursuant or traceable to CannTrust’s May 6, 2019 secondary offering, you may be entitled to a payment from several class action settlements. To be eligible for a payment, you must submit a Claim Form to the Claims Administrator by March 16, 2022.

U.S. Settlement Hearing

The U.S. Court held a Settlement Hearing telephonically on December 2, 2021, at 12:30 p.m. New York time.

If you have questions about the Settlements, please contact Labaton Sucharow at settlementquestions@labaton.com or 1-888-219-6877, or contact the Claims Administrator, at 1-833-871-5359.

Additional information about the Settlements can also be found at www.canntrustsecuritiessettlement.ca.