Champignon Brands Inc. Class Action Lawsuit

Company Name
Champignon Brands Inc.
Stock Symbol
Class Period
March 27, 2020 to February 17, 2021
Motion Deadline
June 9, 2021
Central District of California
22 days left to seek lead plaintiff status

Case Summary

The Champignon Brands Inc. class action lawsuit charges Champignon Brands and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Champignon Brands securities between March 27, 2020 and February 17, 2021, inclusive (the “Class Period”).  The Champignon Brands class action lawsuit was commenced on April 10, 2021 in the Central District of California and is captioned Schneider v. Champignon Brands Inc., No. 21-cv-03120.

Champignon Brands purports to be engaged in the formulation and manufacturing of novel ketamine, ketamine derivatives, and other psychedelics, and delivery platforms for nutraceutical and psychedelic medicine while being supported by its psychedelic medicine clinic platform.

The Champignon Brands class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) Champignon Brands had undisclosed material weaknesses and insufficient financial controls; (ii) Champignon Brands’ previously issued financial statements were false and unreliable; (iii) Champignon Brands’ earlier reported financial statements would need to be restated; (iv) Champignon Brands’ acquisitions involved an undisclosed related party; (v) as a result of the foregoing and subsequent reporting delays and issues, the British Columbia Securities Commission would suspend Champignon Brands from trading; and (vi) as a result, defendants’ statements about Champignon Brands’ business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

On June 22, 2020, Champignon Brands announced that Champignon Brands had “been selected for a continuous disclosure review by the British Columbia Securities Commission (the ‘Commission’).”  According to Champignon Brands, the review related to Champignon Brands’ disclosure obligations since it became a reporting issuer on February 6, 2020 and included a review of the disclosure surrounding certain recent acquisitions completed by Champignon Brands.  Champignon Brands further disclosed that “[i]n connection with the review, . . . the Commission issued a cease trade order suspending trading in the securities of the Company pending the filing of Business Acquisition Reports in connection with the acquisitions of Artisan Growers Ltd., Novo Formulations Ltd. and Tassili Life Sciences Corp.”  On this news, Champignon Brands’ stock price fell approximately 24%,

Then, on September 15, 2020, Champignon Brands further revealed that “[s]ince the review was commenced, the Company has arranged for: . . . Preparation of financial disclosure in connection with the acquisition of AltMed Capital Corp. (‘AltMed’)” and that Champignon Brands “has concluded, in discussions with its external auditor and accounting advisors, that the acquisition of AltMed should be treated as a reverse-takeover.”  On this news, Champignon Brands’ stock price fell an additional 5%.

Finally, on February 17, 2021, Champignon Brands revealed that as a result of the Commission’s review, Champignon Brands “determined to withdraw and refile its condensed interim consolidated financial statements and management’s discussion & analysis (‘MD&A’) for the three and six month periods ended March 31, 2020 (the ‘Original Financial Statements and MD&A’).”  Champignon Brands further disclosed that Champignon Brands “previously recognized intangible assets in connection with the acquisitions of Artisan Growers Ltd., Novo Formulations Ltd. and Tassili Life Sciences Corp. (the ‘Acquisitions’)” but “management determined that the financial statements needed to be restated to correct the accounting for the Acquisitions” as “the assets did not meet the definition of intangible assets for the purposes of international financial reporting standards and as result will be recorded as transaction costs in the Company’s statement of loss and comprehensive loss.”  Moreover, Champignon Brands admitted that “it was determined that a shareholder and contracted consultant (the Consultant’) [sic] of the Company was a related party with respect to the Acquisitions.”  On this news, Champignon Brands’ stock price fell an additional 10%, further damaging investors.

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Champignon Brands securities during the Class Period to seek appointment as lead plaintiff in the Champignon Brands class action lawsuit.  A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class.  A lead plaintiff acts on behalf of all other class members in directing the Champignon Brands class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the Champignon Brands class action lawsuit.  An investor’s ability to share in any potential future recovery of the Champignon Brands action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the Champignon Brands class action lawsuit or have questions concerning your rights regarding the Champignon Brands class action lawsuit, please provide your information here or contact counsel, J.C. Sanchez of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at jsanchez@rgrdlaw.com.  Lead plaintiff motions for the Champignon Brands class action lawsuit must be filed with the court no later than June 9, 2021.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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