Cronos Group Reportedly Under SEC Investigation, Targeted In Shareholder Class Action Lawsuit
In the last two months, Cronos Group, Inc. (NASDAQ:CRON) has twice postponed submitting the filing of its 2019 financial results.
On March 2, the company informed investors that it is unable to complete its financial report and statements for fiscal 2019 because its audit committee was researching a few bulk resin purchases and product sales through the wholesale channel.
A week later, Cronos sent an email to its staff from a company lawyer asking them to keep specific records due to a “confidential and non-public inquiry by the Securities and Exchange Commission,” according to MarketWatch.
The records marked for preservation include those related to bulk resin purchases and wholesale sales. They also include records tied to transactions and dealings with MediPharm Labs Corp. (OTC:MEDIF), TerrAscend Corp. (OTC:TRSSF), Heritage Cannabis Holdings Corp (CSE:CANN), 48North Cannabis Corp (OTC:NCNNF), MarketWatch reported.
On March 17, Cronos said its audit committee is restating its unaudited interim financial results for the first, second and third quarters of 2019.
Cronos said it will lower its revenue for the quarter ended March 31, 2019, by CA$2.5 million ($1.75 million), and for the quarter completed Sep. 30, 2019 by CA$5.1 million.
Cronos, the SEC, 48North, Heritage Cannabis and MediPharm declined MarketWatch's requests for comment, according to the publicaiton, while TerrAscend did not respond to MarketWatch.
Shareholder Lawsuit Filed Against Cronos
A securities litigation firm, Block & Leviton LLP, said Friday that it is investigating whether Cronos has “misled its shareholders,” urging investors who have lost money to contact the firm.
A shareholder class action has been filed against Cronos by investors who acquired the company’s shares in the period between May 9, 2019, and March 2, 2020, according to a press release.
The stock was trading 0.43% higher at $5.90 at the time of publication Friday.
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