India Globalization Capital, Inc.
- Company Name
- India Globalization Capital, Inc.
- Stock Symbol
- Class Period
- October 25, 2017 to October 29, 2018
- Motion Deadline
- January 1, 2019
- District of Maryland
The complaint charges India Globalization and certain of its officers and/or directors with violations of the Securities Exchange Act of 1934. India Globalization operates two distinct business segments: Medical Cannabis Based Alternative Therapies, which develops and commercializes cannabinoid-based alternative therapies for indications such as Alzheimer’s disease, Parkinson’s disease and pain; and Legacy Infrastructure, operated since its inception, which involves trading commodities and heavy equipment rental.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding India Globalization’s business and operations, including that: (1) India Globalization’s business model was in a state of change in order to lure potential blockchain and cannabis investors; (2) India Globalization had overstated the benefits of its relationships with manufacturers, partners and distributors in order to inflate its potential commercial success in the blockchain and cannabis markets; and (3) as a result, the NYSE delisted India Globalization’s shares from its exchange. As a result of these false statements and/or omissions, shares of India Globalization traded at artificially inflated prices during the Class Period, reaching a high of $14.58 per share.
On September 25, 2018, when the Company announced it was going to enter into the Hemp/CBD-infused energy drink space with its introduction of several products, including “Nitro G,” a sugar free energy drink, the price of India Globalization shares increased 458% within a week of the announcement. Following this astronomic rise in the Company’s stock price, Citron Research started to question the veracity of the Company’s operations and MarketWatch launched an investigation and published a story similarly questioning the Company’s operations. This caused a precipitous decline in the price of India Globalization’s stock price.
Then, on October 29, 2018, NYSE American LLC announced that trading in the Company’s stock would be immediately suspended and delisted from the exchange. The exchange’s press release stated that it had commenced delisting procedures pursuant to the NYSE American Company Guide §1003(c)(i), which states that “where the issuer has substantially discontinued the business that it conducted at the time it was listed . . . and has become engaged in ventures or promotions which have not developed to a commercial stage or success of which is problematical, it shall be considered an operating company for the purposes of continued trading and listing on the Exchange.” The release went on to state that “the Company or its management have engaged in operations which, in the opinion of the Exchange, are contrary to the public interest.” On this news, trading in India Globalization shares was halted, and when the shares resumed trading the next day, the price of the shares fell $1.93 per share, or 77.5%, to close at $0.56 per share on October 30, 2018.